MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED · 2020-07-23 · Mahindra & Mahindra Financial...

Letter of Offer

Dated July 21, 2020

For Eligible Equity Shareholders only

MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED

Mahindra & Mahindra Financial Services Limited (“Company” or “Issuer”) was originally incorporated at Mumbai, as “Maxi Motors Financial Services Limited”

on January 1, 1991 as a public limited company under the Companies Act, 1956 and was granted a certificate of incorporation by the Registrar of Companies,

Maharashtra at Mumbai (“RoC”). Thereafter, our Company received its certificate of commencement of business from RoC on January 19, 1991. Subsequently, the

name of our Company was changed to “Mahindra & Mahindra Financial Services Limited” and a fresh certificate of incorporation consequent upon change of name

was granted to our Company by RoC on November 3, 1992. For details of changes in the address of our Registered Office, see “History and Corporate Structure”

on page 108.

Registered Office: Gateway Building, Apollo Bunder, Mumbai 400001

Telephone: +91 22 2289 5500

Corporate Office: 4th Floor, A Wing, Mahindra Towers, Dr. G.M. Bhosale Marg, P.K. Kurne Chowk, Worli, Mumbai 400018

Telephone: +91 22 6652 6000

Contact Person: Arnavaz M. Pardiwalla, Company Secretary & Compliance Officer

E-mail: [email protected]; Website: www.mahindrafinance.com

Corporate Identity Number: L65921MH1991PLC059642

OUR PROMOTER: MAHINDRA & MAHINDRA LIMITED

FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED ONLY

ISSUE OF 617,764,960* FULLY PAID-UP EQUITY SHARES OF FACE VALUE OF ₹ 2 EACH OF OUR COMPANY (“EQUITY SHARES”) FOR CASH AT A PRICE OF ₹ 50 PER

EQUITY SHARE (INCLUDING A PREMIUM OF ₹ 48 PER EQUITY SHARE) AGGREGATING TO ₹ 30,888,248,000* ON A RIGHTS BASIS TO THE ELIGIBLE EQUITY

SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF ONE EQUITY SHARE FOR EVERY ONE FULLY PAID-UP EQUITY SHARE HELD BY THE ELIGIBLE EQUITY

SHAREHOLDERS OF OUR COMPANY ON THE RECORD DATE, THAT IS, ON JULY 23, 2020 (THE “ISSUE”). FOR DETAILS, SEE “TERMS OF THE ISSUE” ON PAGE 338. *Assuming full subscription.

GENERAL RISKS

Investment in equity and equity related securities involves a degree of risk and Investors should not invest any funds in the Issue unless they can afford to take the risk of losing their investment.

Investors are also advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, Investors must rely on their own examination of our

Company and this Issue, including the risks involved. The Equity Shares have neither been recommended nor approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI

guarantee the accuracy or adequacy of this Letter of Offer. Specific attention of the Investors is invited to the section “Risk Factors” on page 20.

ISSUER’S ABSOLUTE RESPONSIBILITY

Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to our Company and the Issue, which is

material in the context of the Issue, that the information contained in this Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and

intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Letter of Offer as a whole or any such information or the expression of any such

opinions or intentions misleading in any material respect.

LISTING

The Equity Shares are listed on BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”, and together with BSE, the “Stock Exchanges”). Our Company has received “in-

principle” approvals from BSE and NSE for listing the Equity Shares through their respective letters, each dated July 15, 2020. Our Company will also make applications to the Stock Exchanges to

obtain their trading approvals for the Rights Entitlements, as required under SEBI circular number SEBI/HO/CFD/DIL2/CIR/P/2020/13 dated January 22, 2020. For the purposes of this Issue, the

Designated Stock Exchange is BSE.

LEAD MANAGERS TO THE ISSUE

Kotak Mahindra Capital Company Limited

1st Floor, 27 BKC, Plot No. C-27

G Block

Bandra Kurla Complex

Bandra (East) Mumbai 400 051

Telephone: +91 (22) 4336 0000

E-mail: [email protected] Investor Grievance E-mail:

[email protected]

Contact Person: Ganesh Rane

Website: www.investmentbank.kotak.com SEBI Registration No.: INM000008704

Axis Capital Limited

1st Floor, Axis House

C-2 Wadia International Centre

Pandurang Budhkar Marg

Worli, Mumbai 400 025 Telephone: +91 (22) 4325 2183

E-mail: [email protected]

Investor Grievance E-mail: [email protected]

Contact Person: Mayuri Arya

Website: www.axiscapital.co.in

SEBI Registration No.: INM000012029

BNP Paribas

BNP Paribas House, 1-North Avenue Maker Maxity, Bandra Kurla Complex

Bandra (E), Mumbai 400 051

Telephone: +91 (22) 3370 4000 E-mail: [email protected]

Investor Grievance E-mail:

[email protected] Contact Person: Mehul Golwala

Website: www.bnpparibas.co.in


Citigroup Global Markets India Private

Limited

1202, 12th

Floor, First International Financial

Center

G-Block, C 54 & 55 Bandra Kurla Complex

Bandra (East) , Mumbai 400 098

Maharashtra, India Telephone: +91 (22) 6175 9999



[email protected] Contact Person: Abhay Agrawal

Website:

www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm


HDFC Bank Limited

Investment Banking Group Unit 401&402, 4

th Floor, Tower B

Peninsula Business Park, Lower Parel

Mumbai 400 013 Maharashtra, India

Telephone: +91 (22) 3395 8233

E-mail: [email protected] Investor Grievance E-mail:

[email protected]

Contact Person: Ravi Sharma/Harsh Thakkar

Website: www.hdfcbank.com SEBI Registration No.: INM000011252

LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE

HSBC Securities and Capital Markets (India)

Private Limited

52/60, Mahatma Gandhi Road, Fort Mumbai 400

001




[email protected] Contact Person: Ayush Jain/Sanjana Maniar

Website: https://www.business.hsbc.co.in/en-

gb/in/generic/ipo-open-offer-and-buyback SEBI Registration No.: INM000010353

ICICI Securities Limited

ICICI Centre, H.T. Parekh Marg Churchgate

Mumbai – 400 020


E mail: [email protected]


[email protected] Contact Person: Rishi Tiwari/Nidhi Wangnoo

Website: www.icicisecurities.com


Nomura Financial Advisory and Securities

(India) Private Limited

Ceejay House, Level 11 Plot F, Shivsagar

Estate

Dr. Annie Besant Road, Worli Mumbai 400 018

Maharashtra, India

Tel: +91 (22) 4037 4037

E-mail: [email protected] Investor grievance e-mail: investorgrievances-

[email protected]

Website: www.nomuraholdings.com/company/ group/asia/india/index.html

Contact Person: Vishal Kanjani/Prithvi Ghag

SEBI Registration No: INM000011419

SBI Capital Markets Limited

202, Maker Tower ‘E’ Cuffe Parade

Mumbai 400 005




[email protected] Contact Person: Sylvia Mendonca/Aditya

Deshpande

Website: www.sbicaps.com SEBI Registration No.: INM000003531

KFin Technologies Private Limited

(formerly known as “Karvy Fintech Private

Limited”)

Selenium, Tower B

Plot No- 31 and 32, Financial District Nanakramguda, Serilingampally

Hyderabad, Rangareddi 500 032

Telangana, India

Telephone: +91 (40) 6716 2222 Toll free numbers: 18004258998/18003454001



Contact Person: M. Murali Krishna

Website: www.kfintech.com

SEBI Registration No.: INR000000221

ISSUE SCHEDULE

ISSUE OPENS ON LAST DATE FOR ON MARKET RENUNCIATION* ISSUE CLOSES ON#

Tuesday, July 28, 2020 Friday, August 7, 2020 Tuesday, August 11, 2020 *Eligible Equity Shareholders are requested to ensure that renunciation through off-market transfer is completed in such a manner that the Rights Entitlements are credited

to the demat account of the Renouncees on or prior to the Issue Closing Date. # Our Board or a duly authorized committee thereof will have the right to extend the Issue period as it may determine from time to time, provided that this Issue will not remain open in excess of 30 days from the Issue Opening Date (inclusive of the Issue Opening Date). Further, no withdrawal of Application shall be permitted by any Applicant after

the Issue Closing Date.

mailto:[email protected]

TABLE OF CONTENTS

SECTION I – GENERAL .................................................................................................................................... 2

DEFINITIONS AND ABBREVIATIONS ................................................................................................... 2

NOTICE TO INVESTORS ......................................................................................................................... 10

PRESENTATION OF FINANCIAL INFORMATION AND OTHER INFORMATION ..................... 15

FORWARD LOOKING STATEMENTS .................................................................................................. 16

SUMMARY OF THIS LETTER OF OFFER ............................................................................................ 17

SECTION II: RISK FACTORS ........................................................................................................................ 20

SECTION III: INTRODUCTION .................................................................................................................... 45

THE ISSUE .................................................................................................................................................. 45

SUMMARY FINANCIAL INFORMATION ............................................................................................ 46

SELECTED STATISTICAL INFORMATION ........................................................................................ 55

RECENT DEVELOPMENTS .................................................................................................................... 60

GENERAL INFORMATION ..................................................................................................................... 66

CAPITAL STRUCTURE ............................................................................................................................ 74

OBJECTS OF THE ISSUE ......................................................................................................................... 84

STATEMENT OF SPECIAL TAX BENEFITS ........................................................................................ 90

SECTION IV: ABOUT OUR COMPANY ....................................................................................................... 96

OUR BUSINESS .......................................................................................................................................... 96

HISTORY AND CORPORATE STRUCTURE ...................................................................................... 108

OUR MANAGEMENT ............................................................................................................................. 111

SECTION V: FINANCIAL INFORMATION ............................................................................................... 115

FINANCIAL STATEMENTS .................................................................................................................. 115

MATERIAL DEVELOPMENTS ............................................................................................................. 322

ACCOUNTING RATIOS AND CAPITALISATION STATEMENT ................................................... 323

STOCK MARKET DATA FOR SECURITIES OF OUR COMPANY ................................................. 324

SECTION VI: LEGAL AND OTHER INFORMATION ............................................................................. 326

OUTSTANDING LITIGATION AND DEFAULTS ............................................................................... 326

GOVERNMENT APPROVALS .............................................................................................................. 327

OTHER REGULATORY AND STATUTORY DISCLOSURES.......................................................... 328

SECTION VII: ISSUE INFORMATION ....................................................................................................... 338

TERMS OF THE ISSUE ........................................................................................................................... 338

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ..................................... 375

RESTRICTIONS ON PURCHASES AND RESALES ........................................................................... 376

SECTION VIII: OTHER INFORMATION .................................................................................................. 388

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................... 388

DECLARATION .............................................................................................................................................. 390

2

SECTION I – GENERAL

DEFINITIONS AND ABBREVIATIONS

This Letter of Offer uses certain definitions and abbreviations as set forth below, which, unless the context

otherwise indicates or implies, or is unless otherwise specified, shall have the meanings as set forth below.

References to any legislation, act, regulation, rules, guidelines or policies shall be to such legislation, act,

regulation, rules, guidelines or policies as amended, supplemented, or re-enacted from time to time and any

reference to a statutory provision shall include any subordinate legislation made from time to time under that

provision, as applicable.

The words and expressions used in this Letter of Offer, but not defined herein, shall have the same meaning (to

the extent applicable) ascribed to such terms under the SEBI ICDR Regulations, the Companies Act, 2013, the

SCRA, the Depositories Act, and the rules and regulations made thereunder, each as amended. Notwithstanding

the foregoing, terms used in “Statement of Special Tax Benefits” and “Financial Statements” on pages 90 and

115 respectively, shall have the meaning given to such terms in such sections.

General terms

Term Description

“Our Company”, “the

Company” or “the Issuer”

Mahindra & Mahindra Financial Services Limited, with its registered office at Gateway

Building, Apollo Bunder, Mumbai 400001, Maharashtra.

“We”, “us”, “our” or “Group” Unless the context otherwise indicates or implies or unless otherwise specified, our

Company, together with our Subsidiaries, Joint Venture and Associate, on a consolidated

basis.

Company related terms

Term Description

“Articles of Association”,

“Articles” or “AoA”

The articles of association of our Company, as amended.

“Associate” An entity which meets the definition of “associate” as per Ind AS 28, in this case being

Mahindra Finance USA, LLC.

“Audited Consolidated

Financial Statements”

The audited consolidated financial statements of our Company and its Subsidiaries, Associate

and Joint Venture as at and for the year ended March 31, 2020 which comprises of the

consolidated balance sheet as at March 31, 2020, the consolidated statement of profit and

loss, including other comprehensive income, the consolidated cash flow statement and the

consolidated statement of changes in equity for the year then ended, and notes to the

consolidated financial statements, including a summary of significant accounting policies and

other explanatory information.

“Audited Standalone

Financial Statements”

The audited standalone financial statements of our Company as at and for the year ended

March 31, 2020 which comprises of the standalone balance sheet as at March 31, 2020, the

standalone statement of profit and loss, including other comprehensive income, the

standalone cash flow statement and the standalone statement of changes in equity for the year

then ended, and notes to the standalone financial statements, including a summary of

significant accounting policies and other explanatory information.

“Board of Directors” or

“Board”

Board of directors of our Company or a duly constituted committee thereof.

“Chairman” The Chairman of our Company.

“Consolidated Financial

Statements”

Together, the Audited Consolidated Financial Statements and the Limited Review

Consolidated Financial Results.

“Corporate Office” Corporate office of our Company situated at 4th Floor, A wing, Mahindra Towers, Dr. G.M.

Bhosale Marg, P.K. Kurne Chowk, Worli, Mumbai 400018.

“Director(s)” Any or all the directors on our Board, as may be appointed from time to time.

“Equity

Shareholder/Shareholder”

A holder of Equity Shares, from time to time.

“Equity Shares” The equity shares of our Company of face value of ₹ 2 each.

“ESOS-2005” The employee stock option plan of our Company, approved by our Shareholders in a general

meeting held on October 24, 2005. Pursuant to a resolution of our Board, at their meeting

held on March 27, 2019, ESOS-2005 has been closed.

“ESOS-2010” The Mahindra & Mahindra Financial Services Limited-Employees Stock Option Scheme

2010.

3

Term Description

“ESOS Trust” Mahindra & Mahindra Financial Services Limited Employees’ Stock Option Trust.

“Executive Directors” Executive director(s) of our Company.

“Financial Statements” Together, the Audited Consolidated Financial Statements, the Audited Standalone Financial

Statements, the Limited Review Consolidated Financial Results and the Limited Review

Standalone Financial Results. For details, see “Financial Statements” on page 115.

“Group Company” Group companies of our Company, in terms of the SEBI ICDR Regulations, namely: (i)

Mahindra Logistics Limited; (ii) New Democratic Electoral Trust; (iii) Smartshift Logistics

Solutions Private Limited; (iv) Swaraj Engines Limited; (v) Tech Mahindra Limited; (vi)

Mahindra Vehicle Manufacturers Limited; (vii) Mahindra Intertrade Limited; (viii) Mahindra

Water Utilities Limited; (ix) Mahindra Holidays and Resorts India Limited; (x) Mahindra

Defence Systems Limited; (xi) Mahindra First Choice Wheels Limited; (xii) Mahindra

Engineering & Chemical Products Limited; (xiii) PSL Media & Communications Limited;

(xiv) Bristlecone India Limited; (xv) NBS International Limited; (xvi) Mahindra Integrated

Business Solutions Limited; (xvii) Mahindra Retail Private Limited; (xviii) Gromax Agri

Equipment Limited; (xix) Mahindra U.S.A., Inc; (xx) Mahindra Construction Company

Limited; (xxi) Mahindra First Choice Services Limited; (xxii) Mahindra Agri Solutions

Limited; (xxiii) Mahindra Summit Agriscience Limited; (xxiv) Ideal Finance Limited; and

(xxv) Mahindra Finance USA, LLC.

“Independent Director” A non-executive and independent director of our Company as per the Companies Act, 2013

and the SEBI Listing Regulations.

“Joint Venture” Ideal Finance Limited, a joint venture of our Company as per Ind AS 28.

“Limited Review

Consolidated Financial

Results”

Limited review unaudited consolidated financial results of our Company for the three months

period ended June 30, 2020, including the notes thereto and the reports thereon.

“Limited Review Standalone

Financial Results”

Limited review unaudited standalone financial results of our Company for the three months

period ended June 30, 2020, including the notes thereto and the reports thereon.

“Materiality Policy” The ‘Policy for Determination of Materiality of Events or Information’ adopted by our Board,

in accordance with Regulation 30 of the SEBI Listing Regulations.

“Material Subsidiary” Mahindra Rural Housing Finance Limited, identified in accordance with the SEBI Listing

Regulations.

“Memorandum

of Association” or

“Memorandum” or “MoA”

The memorandum of association of our Company, as amended.

“Non-Executive Director” A Director, not being an Executive Director of our Company.

“Non-Executive Non-

Independent Director”

A Non-Executive Director, not being an Independent Director of our Company, unless

otherwise specified.

“Promoter Group” The promoter group of our Company, in terms of Regulation 2(1)(pp) of the SEBI ICDR

Regulations.

“Promoter” The promoter of our Company, namely, Mahindra & Mahindra Limited.

“Registered Office” Registered office of our Company situated at Gateway Building, Apollo Bunder, Mumbai

400001

“Registrar of Companies” or

“RoC”

Registrar of Companies, Maharashtra, located at Mumbai.

“Rights Issue Committee” The committee of our Board constituted through the resolution dated June 1, 2020, for

purposes of this Issue and incidental matters thereof, consisting of Ramesh Iyer (Vice-

Chairman & Managing Director), V.S Parthasarathy (Non-Executive Non- Independent

Director) and V. Ravi (Executive Director & Chief Financial Officer).

“Statutory Auditors/Auditors” The current statutory auditors of our Company, namely, B S R & Co. LLP, Chartered

Accountants.

“Subsidiaries” Subsidiaries of our Company as defined under the Companies Act, 2013 and the applicable

accounting standard, in this case being Mahindra Insurance Brokers Limited, Mahindra Rural

Housing Finance Limited, Mahindra Manulife Investment Management Private Limited*

(formerly known as Mahindra Asset Management Company Private Limited), Mahindra

Manulife Trustee Private Limited* (formerly known as Mahindra Trustee Company Private

Limited) and Mahindra Finance CSR Foundation.

* Effective from April 2020, Mahindra Manulife Investment Management Private Limited and

Mahindra Manulife Trustee Private Limited have been classified as joint ventures of our

Company, for the purposes of the Financial Statements. For details, see “Financial

Statements” on page 115.

4

Issue Related Terms

Term Description

“Abridged Letter of Offer”

or “ALOF”

Abridged letter of offer to be sent to the Eligible Equity Shareholders with respect to this

Issue in accordance with the provisions of the SEBI ICDR Regulations and the Companies

Act, 2013.

“Allot”, “Allotment” or

“Allotted”

Allotment of Equity Shares pursuant to this Issue.

“Allotment Account” The accounts opened with the Bankers to this Issue, into which the Application Money lying

credit to the Escrow Account and amounts blocked by Application Supported by Blocked

Amount in the ASBA Account, with respect to successful Applicants will be transferred on

the Transfer Date.

“Allotment Account

Bank(s)”

Bank(s) which are clearing members and registered with SEBI as bankers to an issue and

with whom the Allotment Account will be opened, in this case being, Axis Bank Limited.

“Allotment Date” Date on which the Allotment shall be made pursuant to this Issue.

“Allottee(s)” Person(s) who shall be Allotted Equity Shares pursuant to the Allotment.

“Applicant(s)” or

“Investor(s)”

Eligible Equity Shareholder(s) and/or Renouncee(s) who are entitled to apply or make an

application for the Equity Shares pursuant to this Issue in terms of this Letter of Offer.

“Application” Application made through (i) submission of the Application Form or plain paper

Application to the Designated Branch(es) of the SCSBs or online/ electronic application

through the website of the SCSBs (if made available by such SCSBs) under the ASBA

process, or (ii) filling the online Application Form available on R-WAP, to subscribe to the

Equity Shares at the Issue Price.

“Application Form” Unless the context otherwise requires, an application form (including online application

form available for submission of application through R-WAP facility or though the website

of the SCSBs (if made available by such SCSBs) under the ASBA process) used by an

Applicant to make an application for the Allotment of Equity Shares in this Issue.

“Application Money” The full amount of ₹ 50, payable at the time of Application, in respect of the Equity Shares

applied for in this Issue.

“Application Supported by

Blocked Amount” or

“ASBA”

Application, whether physical or electronic, used by Investors to make an Application and

authorizing an SCSB to block the Bid Amount in the ASBA Account maintained with the

SCSB.

“ASBA Account” Account maintained with the SCSB and specified in the Application Form or the plain paper

Application by the Applicant for blocking the amount mentioned in the Application Form

or the plain paper Application.

“Basis of Allotment” The basis on which the Equity Shares will be Allotted to successful Applicants in

consultation with the Designated Stock Exchange under this Issue, as described in “Terms

of the Issue” on page 338.

“Banker to the Issue

Agreement”

Agreement dated July 21, 2020, entered into by and among our Company, the Registrar to

the Issue, the Lead Managers and the Banker(s) to the Issue, for receipt of Application

Money in the Escrow Account from Applicants making an Application through R-WAP

facility, including for the purposes of refunding the surplus funds remitted by such

Applicants after Basis of Allotment, remitting funds to the Allotment Account from the

Escrow Account and SCSBs (for ASBA Applications) in case of Allottees, release of funds

from the Allotment Account to our Company and other persons, as applicable and providing

such other facilities and services as specified in the agreement.

“Banker(s) to the Issue” Collectively, the Escrow Collection Bank, the Allotment Account Bank(s) and the Refund

Account Bank to the Issue, in this case being Axis Bank Limited.

“Controlling Branches” or

“Controlling Branches of

the SCSBs”

Such branches of the SCSBs which co-ordinate with the Lead Managers, the Registrar to

the Issue and the Stock Exchanges, a list of which is available on the website of SEBI and/or

such other website(s) as may be prescribed by the SEBI from time to time.

“Designated Branches” Such branch/branches of the SCSBs which shall collect the Application Form or the plain

paper Application, as the case may be, used by the Investors and a list of which is available

on the website of SEBI and/or such other website(s) as may be prescribed by the SEBI or

the Stock Exchange(s), from time to time.

“Designated Stock

Exchange”

BSE Limited.

“Eligible Equity

Shareholders”

Equity Shareholders of our Company on the Record Date.

“Escrow Account” One or more no-lien and non-interest bearing accounts with the Escrow Collection Bank for

the purposes of collecting the Application Money from resident Investors making an

Application through the R-WAP facility.

“Escrow Collection Bank” Bank(s) which are clearing members and registered with SEBI as banker to an issue and

with whom the Escrow Account will be opened, in this case being, Axis Bank Limited.

http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries

5

Term Description

“Issue” Issue of 617,764,960* Equity Shares of face value of ₹ 2 each of our Company for cash at a

price of ₹ 50 per Equity Share (including a premium of ₹ 48 per Equity Share) aggregating

to ₹ 30,888,248,000* on a rights basis to the Eligible Equity Shareholders of our Company

in the ratio of one Equity Share for every one Equity Share held by the Eligible Equity

Shareholders of our Company on the Record Date.

*Assuming full subscription.

“Issue Agreement” Issue agreement dated July 21, 2020, between our Company and the Lead Managers,

pursuant to which certain arrangements are agreed to in relation to this Issue.

“Issue Closing Date” Tuesday, August 11, 2020.

“Issue Opening Date” Tuesday, July 28, 2020.

“Issue Period” The period between the Issue Opening Date and the Issue Closing Date, inclusive of both

days, during which Applicants can submit their Applications, in accordance with the SEBI

ICDR Regulations.

“Issue Price” ₹ 50 per Equity Share.

“Issue Proceeds” / “Gross

Proceeds”

Gross proceeds of this Issue.

“Issue Size” Amount aggregating to ₹ 30,888,248,000*

*Assuming full subscription.

“Lead Managers” Kotak Mahindra Capital Company Limited, Axis Capital Limited, BNP Paribas, Citigroup

Global Markets India Private Limited, HDFC Bank Limited, HSBC Securities and Capital

Markets (India) Private Limited, ICICI Securities Limited, Nomura Financial Advisory and

Securities (India) Private Limited and SBI Capital Markets Limited.

“Letter of Offer” This letter of offer dated July 21, 2020, filed with the Designated Stock Exchange, SEBI

and NSE, for purposes of record keeping.

“MCA Circular” General Circular No. 21/2020 dated May 11, 2020 issued by the Ministry of Corporate

Affairs, Government of India.

“Monitoring Agency” Axis Bank Limited. “Monitoring Agency

Agreement”

Agreement dated July 17, 2020 entered into between the Company and the Monitoring

Agency in relation to monitoring of Net Proceeds.

“Net Proceeds” Issue Proceeds less Issue related expenses. For details, see “Objects of the Issue” on page

84.

“On Market Renunciation” The renunciation of Rights Entitlements undertaken by the Investor by trading them over

the secondary market platform of the Stock Exchanges through a registered stock broker in

accordance with the SEBI Rights Issue Circulars and the circulars issued by the Stock

Exchanges, from time to time, and other applicable laws, on or before Friday, August 7,

2020.

“Off Market Renunciation” The renunciation of Rights Entitlements undertaken by the Investor by transferring them

through off market transfer through a depository participant in accordance with the SEBI

Rights Issue Circulars and the circulars issued by the Depositories, from time to time, and

other applicable laws.

“Record Date” Designated date for the purpose of determining the Equity Shareholders eligible to apply

for Equity Shares, being July 23, 2020.

“Refund Account Bank” The Banker to the Issue with whom the refund account will be opened, in this case being

Axis Bank Limited.

“Registrar to the Issue” or

“Registrar”

KFin Technologies Private Limited.

“Registrar Agreement” Agreement dated July 15, 2020 entered into between our Company and the Registrar in

relation to the responsibilities and obligations of the Registrar to the Issue pertaining to this

Issue, including in relation to the R-WAP facility.

“Renouncee(s)” Any person(s) who, not being the original recipient has/have acquired the Rights

Entitlement, in accordance with the SEBI ICDR Regulations read with the SEBI Rights

Issue Circulars.

“Renunciation Period” The period during which the Investors can renounce or transfer their Rights Entitlements

which shall commence from the Issue Opening Date. Such period shall close on Friday,

August 7, 2020, in case of On Market Renunciation. Eligible Equity Shareholders are

requested to ensure that renunciation through off-market transfer is completed in such a

manner that the Rights Entitlements are credited to the demat account of the Renouncee on

or prior to the Issue Closing Date.

“Rights Entitlements” /

“REs”

The right to apply for the Equity Shares, being offered by way of this Issue, by an Investor,

in accordance with the SEBI ICDR Regulations read with the SEBI Rights Issue Circulars,

in this case being one Equity Share for every one Equity Share held by an Eligible Equity

Shareholder, on the Record Date.

6

Term Description

“Rights Entitlement Letter” Letter including details of Rights Entitlements of the Eligible Equity Shareholders. The

Rights Entitlements are also accessible through the R-WAP facility and the link of which is

available on the website of our Company.

“Equity Shareholders” A holder of the Equity Shares, from time to time.

“R-WAP” Registrar’s web based application platform accessible at

https://rights.kfintech.com/mahindra, instituted as an optional mechanism in accordance

with SEBI circular bearing reference number SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated

May 6, 2020, for accessing/ submitting online Application Forms by resident Investors.

“SCSB(s)” Self-certified syndicate banks registered with SEBI, which offers the facility of ASBA. A

list of all SCSBs is available at website of SEBI and/or such other website(s) as may be

prescribed by SEBI from time to time.

“Stock Exchanges” Stock exchanges where our Equity Shares are presently listed, being BSE and NSE.

“Transfer Date” The date on which Application Money held in the Escrow Account and the Application

Money blocked in the ASBA Account will be transferred to the Allotment Account in

respect of successful Applications, upon finalization of the Basis of Allotment, in

consultation with the Designated Stock Exchange.

“Wilful Defaulter” Company or person, as the case may be, categorised as a wilful defaulter by any bank or

financial institution (as defined under the Companies Act, 2013) or consortium thereof, in

accordance with the guidelines on wilful defaulters issued by RBI.

“Working Day(s)” Working day means all days on which commercial banks in Mumbai are open for business.

Further, in respect of Issue Period, working day means all days, excluding Saturdays,

Sundays and public holidays, on which commercial banks in Mumbai are open for business.

Furthermore, the time period between the Issue Closing Date and the listing of the Equity

Shares on the Stock Exchanges, working day means all trading days of the Stock Exchanges,

excluding Sundays and bank holidays, as per circulars issued by SEBI.

Conventional terms or Abbreviations

Term /Abbreviation Description / Full Form

“₹”, “Rs.”, “Rupees” or

“INR”

Indian Rupee.

“AIF(s)” Alternative investment funds, as defined and registered with SEBI under the Securities and

Exchange Board of India (Alternative Investment Funds) Regulations, 2012.

“Arbitration Act” Arbitration and Conciliation Act, 1996.

“ASBA Circulars” Collectively, SEBI circular SEBI/CFD/DIL/ASBA/1/2009/30/12 dated December 30, 2009,

SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011 and the SEBI circular, bearing

reference number SEBI/HO/CFD/DIL2/CIR/P/2020/13 dated January 22, 2020.

“Average Net

Worth/Shareholders’ funds”

Average Net worth is computed as simple average of Net worth as at the beginning of the

financial year and as at the closing of the financial year.

“BSE” BSE Limited.

“CDSL” Central Depository Services (India) Limited.

“Central Government” /

“Government of India” /

“GoI”

Central Government of India.

“CIN” Corporate identity number.

“Companies Act, 1956” Erstwhile Companies Act, 1956 along with the rules made thereunder.

“Companies Act, 2013” /

“Companies Act”

Companies Act, 2013 along with the rules made thereunder.

“Depositories Act” Depositories Act, 1996.

“Depository” A depository registered with SEBI under the Securities and Exchange Board of India

(Depositories and Participants) Regulations, 2018.

“DIN” Director identification number.

“DIPP” Department of Industrial Policy and Promotion, Ministry of Commerce and Industry,

Government of India.

“DP” / “Depository

Participant”

Depository participant as defined under the Depositories Act.

“DP ID” Depository participant identification.

“DPIT” Department for Promotion of Industry and Internal Trade, Ministry of Commerce and

Industry, Government of India, earlier known as Department of Industrial Policy and

Promotion.

“EBITDA” Profit for the year before exceptional items, finance costs, tax, depreciation, amortization and

impairment .

https://rights.kfintech.com/

7


“EPS” Earnings per share.

“FCNR Account” Foreign Currency Non-Resident Account.

“FDI” Foreign direct investment.

“FDI Policy” The consolidated foreign direct investment policy notified by the DIPP (now DPIT) vide

circular no. D/o IPP F. No. 5(1)/2017- FC-1 dated August 28, 2017 effective from August

28, 2017.

“FEMA” Foreign Exchange Management Act, 1999, read with rules and regulations thereunder.

“FEMA Rules” Foreign Exchange Management (Non-debt Instruments) Rules, 2019.

“Financial Year” / “FY” /

“Fiscal”

Period of 12 months ended March 31 of that particular year.

“FIR” First Information Report.

“FPI” Foreign Portfolio Investor as defined under the SEBI FPI Regulations, registered with SEBI

under applicable laws in India.

“Fugitive Economic

Offender”

An individual who is declared a fugitive economic offender under Section 12 of the Fugitive

Economic Offenders Act, 2018.

“FVCIs” Foreign venture capital investors as defined in and registered with SEBI, under the SEBI

FVCI Regulations.

“GDP” Gross domestic product.

“Government” Central Government and/or the State Government, as applicable.

“GST” Goods and Services Tax.

“IEPF” Investor Education and Protection Fund

“IFRS” International Financial Reporting Standards.

“India” Republic of India.

“Indian GAAP” Generally Accepted Accounting Principles followed in India.

“Ind AS” Indian Accounting Standards specified under Section 133 of the Companies Act, 2013 read

with Companies (Indian Accounting Standards) Rules, 2015, as amended.

“ISIN” International securities identification number.

“Income-tax Act” Income-tax Act, 1961.

“Listing Agreement” Equity listing agreements entered into between our Company and the Stock Exchanges in

terms of the SEBI Listing Regulations read along with SEBI Circular No.

CIR/CFD/CMD/6/2015 dated October 13, 2015.

“MCA” The Ministry of Corporate Affairs, Government of India.

“Mutual Fund” Mutual fund registered with SEBI under the Securities and Exchange Board of India (Mutual

Funds) Regulations, 1996.

“N.A.” / “N/A” Not applicable.

“NACH” National Automated Clearing House.

“NCD” Non-convertible debentures issued by our Company, from time to time.

“Net Asset Value (book

value) per Equity Share”

Closing Net worth divided by the number of issued, subscribed and paid-up Equity Shares

outstanding at the end of the financial year.

“Net Worth/Shareholders’

funds”

Net worth represents Equity attributable to owners of the Company, comprising of Equity

share capital and other equity.

“NEFT” National Electronic Fund Transfer.

“NR” / “NRs” Non-resident(s) or person(s) resident outside India, as defined under the FEMA.

“NRE Account” Non-resident external account.

“NRI” A person resident outside India, who is a citizen of India and shall have the same meaning as

ascribed to such term in the Foreign Exchange Management (Deposit) Regulations, 2016.

“NRO Account” Non-resident ordinary account.

“NSDL” National Securities Depository Limited.

“NSE” National Stock Exchange of India Limited.

“OCB” / “Overseas Corporate

Body”

A company, partnership, society or other corporate body owned directly or indirectly to the

extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of

beneficial interest is irrevocably held by NRIs directly or indirectly and which was in

existence on October 3, 2003 and immediately before such date had taken benefits under the

general permission granted to OCBs under FEMA.

“p.a.” Per annum.

“PAN” Permanent Account Number.

“Return on net worth” (in %) Total comprehensive income (aggregate of profit after tax and other comprehensive income

for the year) as per statement of profit and loss attributable to Equity Shareholders, divided

by Average Net worth.

“RBI” Reserve Bank of India.

“Rule 144A” Rule 144A under the US Securities Act.

“Regulation S” Regulation S under the US Securities Act.

“REPO” Repurchase Agreement.

8


“RTGS” Real Time Gross Settlement.

“SAT” Securities Appellate Tribunal.

“SCRA” Securities Contracts (Regulation) Act, 1956.

“SCRR” Securities Contracts (Regulation) Rules, 1957.

“SEBI” Securities and Exchange Board of India.

“SEBI Act” Securities and Exchange Board of India Act, 1992.

“SEBI AIF Regulations” Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.

“SEBI FPI Regulations” Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019.

“SEBI FVCI Regulations” Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations,

2000.

“SEBI ICDR Regulations” Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations, 2018.

“SEBI Listing Regulations” Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)

Regulations, 2015.

“SEBI Rights Issue Circulars” Collectively, SEBI circular, bearing reference number SEBI/HO/CFD/DIL2/CIR/P/2020/13

dated January 22, 2020, SEBI circular bearing reference number

SEBI/HO/CFD/CIR/CFD/DIL/67/2020 dated April 21, 2020 and SEBI circular bearing

reference number SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020.

“SEBI SBEB Regulations” Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

“SEBI Takeover Regulations” Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)

Regulations, 2011.

“SEBI VCF Regulations” Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996.

“State Government” Government of a state of India.

“U.S.” / “USA” / “United

States”

United States of America, including the territories or possessions thereof.

“U.S. QIB” “Qualified institutional buyer”, as defined in Rule 144 of the US Securities Act.

“US$” / “USD” / “$” / “U.S.

dollars”

United States Dollar.

“US SEC” U.S. Securities and Exchange Commission.

“US Securities Act” U.S. Securities Act of 1933, as amended.

“VCFs” Venture capital funds as defined in and registered with SEBI under the SEBI VCF

Regulations or the SEBI AIF Regulations, as the case may be.

Industry Related Terms

Term Description

“Average assets” Average assets is computed as simple average of total assets as per balance sheet as at the

beginning of the financial year and as at the closing of the financial year.

“Average borrowings” Average borrowings is computed as simple average of total borrowings as at the beginning

of the financial year and as at the closing of the financial year.

"Cost to Income Ratio” Percentage of overheads to total income net of finance costs

“Debt to Equity ratio” Percentage of closing total borrowings to closing total equity

“ECBs” External Commercial Borrowing.

“FCNR” Foreign Currency Non-Resident.

“Gross spread” Percentage of total income to Average assets reduced by percentage of interest or finance

costs to Average assets

“ISO” International Organization for Standardization.

“Loan secured by

tangible assets (# for

consolidated)”

Loans secured by tangible assets include loans and advances (including overdue loans) under

retail vehicle finance, housing finance and SME finance businesses before deduction of

impairment loss allowances

“Loan secured by

tangible assets (# for

standalone)”

Loans secured by tangible assets include loans and advances (including overdue loans) under

retail vehicle finance, SME finance businesses before deduction of impairment loss

allowances

“LTV” Loan to value ratio

“MICR” Magnetic Ink Character Recognition.

“Net Spread” PBT before exceptional item divided by Average assets; or percentage of Gross spread less

aggregate of percentage of Overheads / Average Assets and percentage of Write offs & NPA

or impairment provisions on financial assets / Average assets

"Net Spread after Tax

(Return on assets)”

Profit after tax for the year divided by Average assets

“NPAs” Non-Performing Assets.

9

Term Description

“Overheads” Aggregate of employee benefits expenses, depreciation, amortization and impairment, fees

and commission expense and other expenses

"Overheads / Average

Assets”

Aggregate overheads comprising of Employee benefits expenses, Depreciation, amortization

and impairment, Fees and commission expense and Other expenses divided by Average assets

“Write offs & NPA or

impairment provisions

on financial assets/

Average assets'”

Impairment on financial instruments as per statement of profit and loss for the year divided

by Average assets

10

NOTICE TO INVESTORS

The distribution of this Letter of Offer, the Abridged Letter of Offer, the Application Form, the Rights Entitlement

Letter, any other offering material and the issue of Rights Entitlements and the Equity Shares on a rights basis to

persons in certain jurisdictions outside India is restricted by legal requirements prevailing in those jurisdictions.

Persons into whose possession this Letter of Offer, the Abridged Letter of Offer, the Application Form or the

Rights Entitlement Letter may come, are required to inform themselves about and observe such restrictions. For

details, see “Restrictions on Purchases and Resales” on page 376.

Our Company is undertaking this Issue on a rights basis to the Eligible Equity Shareholders and will send/ dispatch

the Abridged Letter of Offer, the Application Form, the Rights Entitlement Letter and other Issue material (i) only

to e-mail addresses of resident Eligible Equity Shareholders who have provided their e-mail addresses; (ii) only

to the Indian addresses of the resident Eligible Equity Shareholders, on a reasonable effort basis, whose e-mail

addresses are not available with the Company or the Eligible Equity Shareholders have not provided the valid e-

mail address to the Company; (iii) only to the Indian addresses of the non-resident Eligible Equity Shareholders,

on a reasonable effort basis, who have provided an Indian address to our Company and located in jurisdictions

where the offer and sale of the Equity Shares may be permitted under laws of such jurisdictions.

Further, this Letter of Offer will be sent/ dispatched (i) only to e-mail addresses of resident Eligible Equity

Shareholders who have provided their e-mail addresses; (ii) only to the Indian addresses of the resident Eligible

Equity Shareholders, on a reasonable effort basis. whose e-mail addresses are not available with the Company

or the Eligible Equity Shareholders have not provided the valid e-mail address to the Company; (iii) only to the

Indian addresses of the non-resident Eligible Equity Shareholders, on a reasonable effort basis, who have provided

an Indian address to our Company and located in jurisdictions where the offer and sale of the Equity Shares may

be permitted under laws of such jurisdictions, by the Registrar on behalf of our Company or the Lead Managers,

in each case who make a request in this regard. Investors can also access this Letter of Offer, the Abridged Letter

of Offer and the Application Form from the websites of the Registrar, our Company, the Lead Managers, and the

Stock Exchanges, and on R-WAP.

Our Company, the Lead Managers and the Registrar will not be liable for non-dispatch of physical copies of Issue

materials, including this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter and the

Application Form.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that

purpose, except that this Letter of Offer was filed with SEBI and the Stock Exchanges. Accordingly, the Rights

Entitlements and the Equity Shares may not be offered or sold, directly or indirectly, and this Letter of Offer, the

Abridged Letter of Offer, the Application Form and the Rights Entitlement Letter and any other offering materials

or advertisements in connection with this Issue may not be distributed, in whole or in part, in or into any

jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction.

This Letter of Offer, the Abridged Letter of Offer, the Application Form or the Rights Entitlement Letter may not

be used for the purpose of, and do not constitute, an offer, invitation to or solicitation by anyone in any jurisdiction

or in any circumstances in which such an offer, invitation or solicitation is unlawful or not authorised or to any

person to whom it is unlawful to make such an offer, invitation or solicitation. In those circumstances, this Letter

of Offer, the Abridged Letter of Offer, the Application Form or the Rights Entitlement Letter must be treated as

sent for information only and should not be acted upon for subscription to Equity Shares and should not be copied

or re-distributed. Accordingly, persons receiving a copy of this Letter of Offer, the Abridged Letter of Offer, the

Application Form or the Rights Entitlement Letter should not, in connection with the issue of the Equity Shares

or the Rights Entitlements, distribute or send this Letter of Offer, the Abridged Letter of Offer, the Application

Form or the Rights Entitlement Letter in or into any jurisdiction where to do so would or might contravene local

securities laws or regulations or would subject the Company or its affiliates or the Lead Managers or their affiliates

to any filing or registration requirement (other than in India). If this Letter of Offer, the Abridged Letter of Offer,

the Application Form or Rights Entitlement Letter is received by any person in any such jurisdiction, or by their

agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to this

Letter of Offer, the Abridged Letter of Offer, the Application Form or the Rights Entitlement Letter.

Neither the Company nor the Lead Managers are making any representation to any person regarding the legality

of an investment in the Rights Entitlements or the Equity Shares by such person under any investment or any other

laws or regulations. No information in this Letter of Offer should be considered to be business, financial, legal,

tax or investment advice.

11

Any person who makes an application to acquire Rights Entitlements and the Equity Shares offered in this

Issue will be deemed to have declared, represented, warranted and agreed that such person is authorized

to acquire the Rights Entitlements and the Equity Shares in accordance with the legal requirements

applicable in such person’s jurisdiction and India, without requirement for our Company or our affiliates

or the Lead Managers and its affiliates to make any filing or registration (other than in India). In addition,

each purchaser of Rights Entitlements and the Equity Shares will be deemed to make the representations,

warranties, acknowledgments and agreements set forth in “Restrictions on Purchases and Resales” on page

376.

Our Company reserves the right to treat as invalid any Application Form which: (i) appears to our

Company or its agents to have been executed in, electronically transmitted from or dispatched from the

United States (unless the Application Form is submitted by a U.S. QIB in the United States) or other

jurisdictions where the offer and sale of the Equity Shares is not permitted under laws of such jurisdictions;

(ii) does not include the relevant certifications set out in the Application Form, including to the effect that

the person submitting and/or renouncing the Application Form is (a) outside India and the United States

and is a foreign corporate or institutional shareholder eligible to subscribe for the Equity Shares under

applicable securities laws or (b) a U.S. QIB in the United States, and in each case such person is complying

with laws of jurisdictions applicable to such person in connection with this Issue; or (iii) where either a

registered Indian address is not provided or where our Company believes acceptance of such Application

Form may infringe applicable legal or regulatory requirements; and our Company shall not be bound to

issue or allot any Equity Shares in respect of any such Application Form.

Neither the delivery of this Letter of Offer nor any sale of Equity Shares hereunder, shall, under any circumstances,

create any implication that there has been no change in our Company’s affairs from the date hereof or the date of

such information or that the information contained herein is correct as at any time subsequent to the date of this

Letter of Offer or the date of such information. Investors may be subject to adverse foreign, state or local tax or

legal consequences as a result of buying or selling of Equity Shares or Rights Entitlements. As a result, each

Investor should consult its own counsel, business advisor and tax advisor as to the legal, business, tax and related

matters concerning the offer of the Equity Shares or Rights Entitlements. In addition, neither our Company nor

the Lead Managers nor its affiliates is making any representation to any offeree or purchaser of the Equity Shares

regarding the legality of an investment in the Equity Shares by such offeree or purchaser under any applicable

laws or regulations.

THIS DOCUMENT IS SOLELY FOR THE USE OF THE PERSON WHO RECEIVED IT FROM OUR

COMPANY OR FROM THE REGISTRAR. THIS DOCUMENT IS NOT TO BE REPRODUCED OR

DISTRIBUTED TO ANY OTHER PERSON.

12

NOTICE TO INVESTORS IN THE UNITED STATES

THE RIGHTS ENTITLEMENTS AND THE EQUITY SHARES HAVE NOT BEEN AND WILL NOT BE

REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “US

SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD,

RESOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR THE TERRITORIES OR

POSSESSIONS THEREOF (THE “UNITED STATES” OR “U.S.”), EXCEPT IN A TRANSACTION

EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT. THE EQUITY

SHARES REFERRED TO IN THIS LETTER OF OFFER ARE BEING OFFERED AND SOLD (I) IN

OFFSHORE TRANSACTIONS OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION

S UNDER THE US SECURITIES ACT (“REGULATION S”) TO EXISTING SHAREHOLDERS LOCATED

IN JURISDICTIONS WHERE SUCH OFFER AND SALE OF THE EQUITY SHARES IS PERMITTED

UNDER LAWS OF SUCH JURISDICTIONS AND (II) IN THE UNITED STATES TO “QUALIFIED

INSTITUTIONAL BUYERS” (AS DEFINED IN RULE 144A UNDER THE US SECURITIES ACT) (“U.S.

QIB”) PURSUANT TO SECTION 4(a)(2) OF THE US SECURITIES ACT. THE OFFERING TO WHICH THIS

LETTER OF OFFER RELATES IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS,

AN OFFERING OF ANY EQUITY SHARES OR RIGHTS ENTITLEMENTS FOR SALE IN THE UNITED

STATES OR AS A SOLICITATION THEREIN OF AN OFFER TO BUY ANY OF THE SAID SECURITIES,

EXCEPT IN EACH CASE TO PERSONS IN THE UNITED STATES WHO ARE U.S. QIBs. ACCORDINGLY,

YOU SHOULD NOT FORWARD OR TRANSMIT THIS LETTER OF OFFER IN OR INTO THE UNITED

STATES AT ANY TIME (OTHER THAN TO U.S. QIBs).

Neither our Company, nor any person acting on behalf of our Company, will accept a subscription or renunciation

from any person, or the agent of any person, who appears to be, or who our Company, or any person acting on

behalf of our Company, has reason to believe is, in the United States when the buy order is made (other than

persons in the United States who are U.S. QIBs). No Application Form should be postmarked in the United States,

electronically transmitted from the United States or otherwise dispatched from the United States (in each case,

other than from persons in the United States who are U.S. QIBs) or from any other jurisdiction where it would be

illegal to make an offer of securities under this Letter of Offer. Our Company is undertaking this Issue on a rights

basis to the Eligible Equity Shareholders and will send/ dispatch the Abridged Letter of Offer, the Application

Form, the Rights Entitlement Letter and other Issue material (i) only to e-mail addresses of resident Eligible Equity






be permitted under laws of such jurisdictions.

Any person who acquires Rights Entitlements or Equity Shares will be deemed to have declared, warranted and

agreed, by accepting the delivery of this Letter of Offer, that (i) it is not and that at the time of subscribing for

the Equity Shares or the Rights Entitlements, it will not be, in the United States; or (ii) it is a U.S. QIB in the

United States, and in each case is authorized to acquire the Rights Entitlements and the Equity Shares in

compliance with all applicable laws and regulations.

Our Company reserves the right to treat as invalid any Application Form which: (i) appears to our Company or

its agents to have been executed in, electronically transmitted from or dispatched from the United States (unless

the Application Form is submitted by a U.S. QIB in the United States) or other jurisdictions where the offer and

sale of the Equity Shares is not permitted under laws of such jurisdictions; (ii) does not include the relevant

certifications set out in the Application Form, including to the effect that the person submitting and/or renouncing

the Application Form is (a) outside India and the United States and is a foreign corporate or institutional

shareholder eligible to subscribe for the Equity Shares under applicable securities laws or (b) a U.S. QIB in the

United States, and in each case such person is complying with laws of jurisdictions applicable to such person in

connection with this Issue; or (iii) where either a registered Indian address is not provided or where our Company

believes acceptance of such Application Form may infringe applicable legal or regulatory requirements; and our

Company shall not be bound to issue or allot any Equity Shares in respect of any such Application Form.

All offers and sales in the United States of the Rights Entitlements and the Equity Shares have been, or will be,

made solely by our Company. The Lead Managers are not making, and will not make, and will not participate or

otherwise be involved in any offers or sales of the Rights Entitlements, the Equity Shares or any other security

with respect to this Issue in the United States.

13

The Rights Entitlements and the Equity Shares have not been approved or disapproved by the US Securities and

Exchange Commission (the “US SEC”), any state securities commission in the United States or any other US

regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering

of the Rights Entitlements, the Equity Shares or the accuracy or adequacy of this Letter of Offer. Any

representation to the contrary is a criminal offence in the United States.

THIS DOCUMENT IS SOLELY FOR THE USE OF THE PERSON WHO RECEIVED IT FROM OUR

COMPANY OR FROM THE REGISTRAR. THIS DOCUMENT IS NOT TO BE REPRODUCED OR

DISTRIBUTED TO ANY OTHER PERSON.

ENFORCEMENT OF CIVIL LIABILITIES

The Company is a public limited company under the laws of India and a majority of the Directors and all executive

officers are residents of India. It may not be possible or may be difficult for investors to effect service of process

upon the Company or these other persons outside India or to enforce against them in courts in India, judgments

obtained in courts outside India. India is not a party to any international treaty in relation to the automatic

recognition or enforcement of foreign judgments.

However, recognition and enforcement of foreign judgments is provided for under Sections 13, 14 and 44A of the

Code of Civil Procedure, 1908, as amended (the “Civil Procedure Code”). Section 44A of the Civil Procedure

Code provides that where a certified copy of a decree of any superior court (within the meaning of that section)

in any country or territory outside India which the Government of India has by notification declared to be a

reciprocating territory, is filed before a district court in India, such decree may be executed in India as if the decree

has been rendered by a district court in India. Section 44A of the Civil Procedure Code is applicable only to

monetary decrees or judgments not being in the nature of amounts payable in respect of taxes or other charges of

a similar nature or in respect of fines or other penalties. Section 44A of the Civil Procedure Code does not apply

to arbitration awards even if such awards are enforceable as a decree or judgment. Among others, the United

Kingdom, Singapore, Hong Kong and the United Arab Emirates have been declared by the Government of India

to be reciprocating territories within the meaning of Section 44A of the Civil Procedure Code.

The United States has not been declared by the Government of India to be a reciprocating territory for the purposes

of Section 44A of the Civil Procedure Code. Under Section 14 of the Civil Procedure Code, an Indian court shall,

on production of any document purporting to be a certified copy of a foreign judgment, presume that the judgment

was pronounced by a court of competent jurisdiction unless the contrary appears on the record; but such

presumption may be displaced by proving want of jurisdiction.

A judgment of a court in any non-reciprocating territory, such as the United States, may be enforced in India only

by a suit upon the judgment subject to Section 13 of the Civil Procedure Code, and not by proceedings in

execution. Section 13 of the Civil Procedure Code, which is the statutory basis for the recognition of foreign

judgments (other than arbitration awards), states that a foreign judgment shall be conclusive as to any matter

directly adjudicated upon between the same parties or between parties under whom they or any of them claim

litigating under the same title except where:

• the judgment has not been pronounced by a court of competent jurisdiction;

• the judgment has not been given on the merits of the case;

• the judgment appears on the face of the proceedings to be founded on an incorrect view of international law

or a refusal to recognize the law of India in cases where such law is applicable;

• the proceedings in which the judgment was obtained are opposed to natural justice;

• the judgment has been obtained by fraud; and/or

• the judgment sustains a claim founded on a breach of any law in force in India.

A suit to enforce a foreign judgment must be brought in India within three years from the date of the judgment in

the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would

award damages on the same basis as a foreign court if an action is brought in India. In addition, it is unlikely that

an Indian court would enforce foreign judgments if it considered the amount of damages awarded as excessive or

inconsistent with public policy or if the judgments are in breach of or contrary to Indian law. A party seeking to

enforce a foreign judgment in India is required to obtain prior approval from the Reserve Bank of India to

repatriate any amount recovered pursuant to execution of such judgment. Any judgment in a foreign currency

14

would be converted into Rupees on the date of such judgment and not on the date of payment and any such amount

may be subject to income tax in accordance with applicable laws. The Company cannot predict whether a suit

brought in an Indian court will be disposed of in a timely manner or be subject to considerable delays.

15

PRESENTATION OF FINANCIAL INFORMATION AND OTHER INFORMATION

Certain Conventions

Unless otherwise specified or the context otherwise requires, all references in this Letter of Offer to (i) the ‘US’

or ‘U.S.’ or the ‘United States’ are to the United States of America and its territories and possessions; (ii) ‘India’

are to the Republic of India and its territories and possessions; and the ‘Government’ or ‘GoI’ or the ‘Central

Government’ or the ‘State Government’ are to the Government of India, Central or State, as applicable. In this

Letter of Offer, references to the singular also refer to the plural and one gender also refers to any other gender,

where applicable.

Financial Data

Unless stated otherwise or unless the context requires otherwise, the financial data in this Letter of Offer is derived

from the Consolidated Financial Statements. The Audited Consolidated Financial Statements, Audited Standalone

Financial Statements, Limited Review Consolidated Financial Results and Limited Review Standalone Financial

Results which have been prepared in accordance with Indian Accounting Standards (‘Ind AS’), notified under the

Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting

Standards) Rules, 2016, prescribed under section 133 of the Companies Act, 2013, read with the relevant rules

issued thereunder and the other accounting principles generally accepted in India and guidance notes specified by

the Institute of Chartered Accountants of India, which have been included in this Letter of Offer.

Our Company publishes its financial statements in Indian Rupees. Any reliance by persons not familiar with

Indian accounting practices on the financial disclosures presented in this Letter of Offer should accordingly be

limited. Our Fiscal commences on April 1 of each year and ends on March 31 of the succeeding year, so all

references to a particular “Fiscal Year”, “Fiscal”, “Financial Year” or “FY” are to the 12 months period ended on

March 31 of that year. In this Letter of Offer, any discrepancies in any table between the total and the sums of the

amounts listed are due to rounding off, and unless otherwise specified, all financial numbers in parenthesis

represent negative figures. Unless stated or expressed otherwise, throughout this Letter of Offer, all figures have

been expressed in ₹ millions. Certain figures in decimals have been rounded off and accordingly there may be

consequential changes in this Letter of Offer.

For details, see “Financial Statements” on page 115.

Currency of Presentation

Unless otherwise specified or the context otherwise requires, all references to:

• ‘INR’, ‘₹’, ‘Indian Rupees’ and ‘Rupees’ are to the legal currency of India; and

• ‘US$’, ‘USD’, ‘$’ and ‘U.S. Dollars’ are to the legal currency of the United States of America.

The following table sets forth, for the dates indicated, information with respect to the exchange rate between the

Rupee and the respective foreign currencies:

Sr. No. Name of the Currency Exchange rates as on

June 30, 2020 March 31, 2020 (in ₹) March 31, 2019 (in ₹)

1. 1 United States Dollar (“USD”) 75.53 75.39 69.17

Source: www.fbil.org.in for June 30, 2020, March 31, 2020 and March 31, 2019.

Note:

• In the event that any of the abovementioned dates of any of the respective financial years is a public holiday,

the previous calendar day not being a public holiday has been considered.

Such conversion should not be considered as a representation that such currency amounts have been, could have

been or can be converted into Rupees (₹) at any particular rate, the rates stated above or at all.

16

FORWARD LOOKING STATEMENTS

Certain statements contained in this Letter of Offer that are not statements of historical fact constitute ‘forward-

looking statements’. Investors can generally identify forward-looking statements by terminology including

‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘objective’, ‘plan’,

‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, ‘future’, ‘forecast’, ‘target’ or other words or

phrases of similar import. Similarly, statements that describe our objectives, plans or goals are also forward-

looking statements. However, these are not the exclusive means of identifying forward-looking statements. All

statements regarding our Company’s expected financial conditions, results of operations, business plans and

prospects are forward-looking statements. These forward-looking statements may include planned projects,

revenue and profitability (including, without limitation, any financial or operating projections or forecasts) and

other matters discussed in this Letter of Offer that are not historical facts.

These forward-looking statements contained in this Letter of Offer (whether made by our Company or any third

party), are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that

may cause the actual results, performance or achievements of our Company to be materially different from any

future results, performance or achievements expressed or implied by such forward-looking statements or other

projections. All forward-looking statements are subject to risks, uncertainties and assumptions about our Company

that could cause actual results to differ materially from those contemplated by the relevant forward-looking

statement. Important factors that could cause our actual results, performances and achievements to differ

materially from any of the forward-looking statements include, among others:

• Impact of COVID-19 on our business, financial condition and results of operations;

• Any disruption in our sources of funding;

• Any adverse developments in the industries we operate in, including the new and pre-owned vehicle financing

industry;

• Inability to compete in an increasingly competitive industry; and

• Risk of non-payment or default by borrowers.

Additional factors that could cause actual results, performance or achievements to differ materially include, but

are not limited to, those discussed in the section “Risk Factors” on page 20.

By their nature, market risk disclosures are only estimates and could be materially different from what actually

occurs in the future. As a result, actual future gains, losses or impact on net interest income and net income could

materially differ from those that have been estimated, expressed or implied by such forward looking statements

or other projections. The forward-looking statements contained in this Letter of Offer are based on the beliefs of

management, as well as the assumptions made by, and information currently available to, the management of our

Company. Although our Company believes that the expectations reflected in such forward-looking statements are

reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these

uncertainties, Investors are cautioned not to place undue reliance on such forward-looking statements. In any

event, these statements speak only as of the date of this Letter of Offer or the respective dates indicated in this

Letter of Offer and neither our Company nor the Lead Managers undertakes any obligation to update or revise

any of them, whether as a result of new information, future events, changes in assumptions or changes in factors

affecting these forward looking statements or otherwise. If any of these risks and uncertainties materialise, or if

any of our Company’s underlying assumptions prove to be incorrect, the actual results of operations or financial

condition of our Company could differ materially from that described herein as anticipated, believed, estimated

or expected. All subsequent forward-looking statements attributable to our Company are expressly qualified in

their entirety by reference to these cautionary statements.

17

SUMMARY OF THIS LETTER OF OFFER

The following is a general summary of certain disclosures included in this Letter of Offer and is not exhaustive,

nor does it purport to contain a summary of all the disclosures in this Letter of Offer or all details relevant to

prospective investors. This summary should be read in conjunction with, and is qualified in its entirety by, the

more detailed information appearing elsewhere in this Letter of Offer, including the sections, “Objects of the

Issue”, “Outstanding Litigation and Defaults”, “Our Business” and “Risk Factors” on pages 84, 326, 96 and 20

respectively.

Summary of our Primary Business

We are one of the leading deposit taking non-banking finance companies with customers primarily in the rural and

semi-urban markets of India. We are primarily engaged in providing financing for new and pre-owned auto and

utility vehicles (including three wheelers), tractors, cars and commercial vehicles.

Objects of the Issue

The Net Proceeds are proposed to be utilised by our Company in accordance with the details set forth below:

Particulars# Amount

(In ₹ millions)

Repayment/ prepayment of all or a portion of certain borrowings availed by our Company 16,000.00

Augmenting the long-term capital and resources for meeting funding requirements for our

Company’s business activities

8,000.00

General corporate purposes* 6,790.75

Total Net Proceeds** 30,790.75 *The amount to be utilised for general corporate purposes shall not exceed 25% of the Net Proceeds. **Assuming full subscription and Allotment in the Issue. Subject to finalisation of the Basis of Allotment and the Allotment of the Equity Shares. #In the event of undersubscription in the Issue, our Company will proportionately deploy the Net Proceeds towards the stated objects of

the Issue and towards general corporate purposes, in accordance with applicable laws.

For details, see “Objects of the Issue” on page 84.

Subscription to the Issue by our Promoter and Promoter Group

Our Promoter, pursuant to a letter dated July 18, 2020, has confirmed that it intends to (i) subscribe to the full

extent of its Rights Entitlements and (ii) subscribe to additional Equity Shares in the Issue and any undersubscribed

portion in the Issue, over and above its Rights Entitlements for ensuring full subscription in the Issue, subject to

compliance with applicable laws.

To the extent required by applicable law, any participation by the Promoter, over and above its Rights Entitlement,

shall not result in a breach of the minimum public shareholding requirements prescribed under applicable law. As

on the date of this Letter of Offer, members of our Promoter Group (other than our Promoter), do not hold any

Equity Shares in the Company.

Summary of Financial Information

A summary of selected financial information of our Company for the Fiscals 2020, 2019 and 2018 and for the

three months period ended June 30, 2020, derived from the Consolidated Financial Statements, is set out below.

(In ₹ millions, unless otherwise specified)

Particulars As at June 30,

2020

As at March 31,

2020

As at March

31, 2019

As at March

31, 2018

Equity share capital 1,231.27 1,230.70 1,229.75 1,228.95

Net worth^ 124,155.26 119,690.05 112,690.18 98,550.04

Total income 30,686.84 119,964.56 104,308.55 79,121.75

Profit for the period/ year 4,321.19 10,858.18 18,672.82 12,162.87

Basic earnings per Equity Share* (in ₹) 7.01 17.48 29.73 20.40

Diluted earnings per Equity Share* (in ₹) 7.00 17.44 29.67 20.37

Net asset value per Equity Share (in ₹) 200.97 194.51 183.27 160.38

18

Particulars As at June 30,

2020

As at March 31,

2020

As at March

31, 2019

As at March

31, 2018

Total borrowings (sum of borrowings

under all types of instruments)

697,651.74 656,342.40 588,016.21 449,861.53

*Not annualised.

^Net worth represents Equity attributable to owners of the Company comprising of Equity share capital and other equity.

Qualifications of the Auditors

There are no Auditors’ qualifications which have not been given effect to in the Financial Statements.

Summary of Outstanding Litigation and Material Developments

A summary of material outstanding legal proceedings involving our Company and our Subsidiaries, as on the date

of this Letter of Offer, is set out below.

(in ₹ millions, unless otherwise specified)

Sr. No. Type of Proceedings Number

of cases

Amount (to the

extent

quantifiable)

I. Litigation involving our Company

A. Proceedings involving issues of moral turpitude or criminal liability on part

our Company

190 Not quantifiable

B. Proceedings involving material violations of statutory regulations by our

Company

Nil Not applicable

C. Matters involving economic offences where proceedings have been initiated

against our Company

Nil Not applicable

D. Other proceedings involving our Company which involve an amount

exceeding the Materiality Threshold or are otherwise material in terms of the

Materiality Policy, and other pending matters which, if they result in an

adverse outcome would materially and adversely affect the operations or the

financial position of our Company

Nil Not applicable

Total 190 -

II. Litigation involving our Subsidiaries

A. Proceedings involving issues of moral turpitude or criminal liability on part

of our Subsidiaries

16 Not quantifiable

B. Proceedings involving material violations of statutory regulations by our

Subsidiaries

Nil Not applicable

C. Matters involving economic offences where proceedings have been initiated

against our Subsidiaries

Nil Not applicable

D. Other proceedings involving our Company which involve an amount

exceeding the Materiality Threshold or are otherwise material in terms of the

Materiality Policy, and other pending matters which, if they result in an

adverse outcome would materially and adversely affect the operations or the

financial position of our Company

Nil Not applicable

Total 16 -

For further details, see “Outstanding Litigation and Defaults” on page 326.

Risk Factors

See “Risk Factors” on page 20.

Contingent Liabilities and commitments of our Company

Contingent liabilities and commitments of our Company as of March 31, 2020, as per Ind AS 37, derived from

the Consolidated Financial Statements, is set out below:

(In ₹ millions)

Particulars As at March 31, 2020

Contingent liabilities 12,643.37

Commitments 6,750.32

Total 19,393.69

19

For details of contingent liabilities and commitments as per Ind AS 37 “Provisions, Contingent Liabilities and

Contingent Assets”, see “Financial Statements” on page 275.

Related Party Transactions

For details of related party transactions, see “Financial Statements” on page 300.

Financing Arrangements

There have been no financing arrangements whereby our Promoter, directors of our Promoter, members of our

Promoter Group, Directors or their relatives have financed the purchase by any other person of securities of our

Company, during the period of six months immediately preceding the date of this Letter of Offer.

Issue of Equity Shares for consideration other than cash in the last one year

Our Company has not issued Equity Shares for consideration other than cash during the period of one year

preceding the date of this Letter of Offer.

20

SECTION II: RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all the information

in this Letter of Offer, including the risks and uncertainties described below, before making an investment in our

Equity Shares. This section should be read together with our Financial Statements and other financial information

included elsewhere in this Letter of Offer.

The risks and uncertainties described below are not the only risks that we currently face. Additional risks and

uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect

our business, financial condition, results of operations and cash flows. If any or some combination of the following

risks, or other risks that are not currently known or believed to be adverse, actually occur, our business, financial

condition and results of operations could suffer, the trading price of, and the value of your investment in, our

Equity Shares could decline and you may lose all or part of your investment.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the

effect of heightening many of the other risks described in this section, such as those relating to non-payment or

default by borrowers, our levels of indebtedness and our ability to comply with the covenants contained in the

agreements that govern our indebtedness. In making an investment decision with respect to this Issue, you must

rely on your own examination of us and the terms of this Issue, including the merits and risks involved.

This Letter of Offer also contains forward-looking statements that involve risks, assumptions, estimates and

uncertainties. Our actual results could differ materially from those anticipated in these forward-looking

statements as a result of certain factors, including the considerations described below and elsewhere in this Letter

of Offer.

Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial

or other implications of any of the risks described in this section. In this section, unless the context otherwise

indicates or implies, “we”, “us” and “our” refer to our Company together with our Subsidiaries and Joint

Venture.

INTERNAL RISKS

1. The Coronavirus disease (COVID-19) has had an adverse effect on our business and operations and the

extent to which it may continue to do so in the future, is uncertain and cannot be predicted.

In the first half of calendar year 2020, COVID-19 spread to a majority of countries across the world,

including India. The COVID-19 pandemic has had, and may continue to have, significant repercussions

across local, national and global economies and financial markets. In particular, a number of governments

and organizations have revised GDP growth forecasts for calendar year 2020 downward in response to the

economic slowdown caused by the spread of COVID-19, and it is possible that the COVID-19 pandemic

will cause a prolonged global economic crisis or recession.

The global impact of the COVID-19 pandemic has been rapidly evolving and public health officials and

governmental authorities have responded by taking measures, including in India where our operations are

primarily based, such as prohibiting people from assembling in large numbers, instituting quarantines,

restricting travel, issuing “stay-at-home” orders and restricting the types of businesses that may continue to

operate, among many others. On March 14, 2020, India declared COVID-19 as a “notified disaster” and

imposed a nationwide lockdown beginning on March 25, 2020. The lockdown remains in force in many

cities, with limited and progressive relaxations being granted for movement of goods and people in other

places and cautious re-opening of businesses and offices. However, lockdowns may be re-introduced or

extended in the future. The COVID-19 pandemic has affected and may continue to affect our business, results

of operations and financial condition in a number of ways such as:

• it led to a closure of our branch offices and halted our field operations from the last week of March 2020

and we were only able to resume operations in a gradual manner from the second week of May 2020. A

surge in the number of COVID-19 cases in the future could result in a complete or partial closure of, or

other operational issues at our offices resulting from government action;

• COVID-19 has caused a material decline in general business activity and demand for auto and utility

vehicles, tractors, cars and commercial vehicles and their financing; we experienced a substantial

21

reduction in new business during the months of April, May and June 2020 and we expect demand for

our products to remain low over the next few months;

• in accordance with our Board approved moratorium policy read with the RBI guidelines, our Company

has granted moratorium up to six months on the payment of installments falling due between March 1,

2020 and August 31, 2020 to all eligible borrowers. In order to cover the contingencies that may arise

due to the COVID-19 pandemic, we have incorporated management overlays in the measurement of

impairment loss allowance and recognized additional provision of ₹ 7,285.30 million in our consolidated

statement of profit and loss for the quarter and year ended March 31, 2020 and ₹ 6,644.59 million in our

consolidated statement of profit and loss for the quarter ended June 30, 2020. However, our impairment

loss allowance estimates are inherently uncertain and, as a result, actual results may differ from these

estimates. Approximately 75% of our customers opted for the moratorium on their monthly installments,

which adversely affected our daily cash flow and liquidity position. This also resulted in a change in our

asset-liability maturity profile wherein the collections that were expected to be received during the

period of moratorium were deferred, while we continue to repay our loans as they become due. We

cannot assure you that RBI will not permit a further extension of the moratorium period, which may

require us to make higher provisions and impact our overall profitability and growth.

• our customers who primarily reside in rural and semi-urban markets have less financial wherewithal

than other borrowers and may default on their loan payments or additional interest payment obligations,

in case the customers opt for the moratorium. We expect a further delay in repayments from customers

who have purchased heavy commercial vehicles as well as vehicles used as aggregator taxis;

• our inability to access debt and equity capital on acceptable terms, or at all, and a further disruption and

instability in the global financial markets or deteriorations in credit and financing conditions or

downgrade of our or India’s credit rating that may affect our access to capital and other sources of

funding necessary to fund our operations or address maturing liabilities on a timely basis;

• the effects of the COVID-19 pandemic on our future results of operations, cash flows and financial

condition could adversely impact our ability to service our debt obligations and comply with the

covenants in our credit facilities and other financing agreements and could result in events of default

and the acceleration of indebtedness, which could negatively impact our financial condition, results of

operations and our ability to make additional borrowings;

• our ability to meet our ongoing disclosure obligations to the relevant stock exchanges might be adversely

affected, despite our best efforts;

• inherent productivity, connectivity, and oversight challenges due to an increase in number of individuals

working from home;

• increased vulnerability to cyber-security threats and potential breaches, including phishing attacks,

malware and impersonation tactics, resulting from the increase in numbers of individuals working from

home;

• an increase in operational costs as a result of additional cleaning of premises required or hiring of

additional support staff for carrying out our operations;

• uncertainty as to what conditions must be satisfied before government authorities completely lift “stay-

at-home” orders; and

• the potential negative impact on the health of our personnel, particularly if a significant number of them

are afflicted by COVID-19, could result in a deterioration in our ability to ensure business continuity

during this disruption.

While COVID-19 has directly affected our business and operations, there is significant uncertainty regarding

the duration and impact of the COVID-19 pandemic, as well as possible future responses, which makes it

impossible for us to predict with certainty the impact that COVID-19 will have on us and our customers at

this time. Any intensification of the COVID-19 pandemic or any future outbreak of another highly infectious

or contagious disease may adversely affect our business, financial condition and results of operations.

22

Further, our statutory auditors have included an emphasis of matter in their audit report for the financial year

2020 and as stated in the emphasis of matter, in respect of accounts overdue but standard as on February 29,

2020 where moratorium benefit has been granted, the staging of those accounts as on March 31, 2020 is based

on the days past due status as on February 29, 2020 in accordance with the COVID-19 Regulatory Package

announced by the RBI vide notifications dated March 27, 2020, April 17, 2020. In addition, our statutory

auditors have stated in the emphasis of matter that the extent to which COVID-19 will impact our financial

performance is dependent on future developments, which are highly uncertain. Our statutory auditors have

also included an emphasis of matter in their report on our unaudited consolidated financial results for the

quarter ended June 30, 2020 that in respect of accounts where moratorium benefit has been granted, the

staging of those accounts as at June 30, 2020 is based on the days past due status as on the date when the

moratorium benefit was granted and is in accordance with the COVID-19 Regulatory Package announced by

the RBI vide notifications dated March 27, 2020, April 17, 2020 and May 23, 2020. Further, the extent to

which the COVID-19 pandemic will impact our financial performance is dependent on future developments,

which are highly uncertain.

The extent to which the COVID-19 pandemic will impact our financial performance is dependent on future

developments, which are highly uncertain and therefore, our prior financial results are not necessarily

indicative of results to be expected for future periods. Further, as COVID-19 adversely affects our business

and results of operations, it may also have the effect of exacerbating many of the other risks described in this

“Risk Factors” section.

2. Any disruption in our sources of funding could adversely affect our liquidity and financial condition.

The liquidity and profitability of our business depend, in large part, on our timely access to, and the costs

associated with, raising funds. Our funding requirements historically have been met from various sources,

including equity funding, secured and unsecured loans, including rupee-denominated term loans and cash

credit facilities from banks and financial institutions, external commercial borrowings, securitization and

assignment of receivables, secured and unsecured non-convertible debentures, subordinated bonds,

commercial paper, fixed deposits and inter-corporate deposits. Our business thus depends and will continue

to depend on our ability to access a variety of funding sources. Our ability to raise funds on acceptable terms

and at competitive rates depends on various factors including global and local macroeconomic conditions and

the effect of events such as the COVID-19 pandemic, our current and future results of operations and financial

condition, our risk management policies, the shareholding of our Promoter in our Company, our credit ratings,

India’s sovereign credit rating, our brand equity and the regulatory environment and policy initiatives in India.

Changes in economic, regulatory and financial conditions or any lack of liquidity in the market could

adversely affect our ability to access funds at competitive rates, which could adversely affect our liquidity

and financial condition.

3. Any adverse developments in the industries we operate in, including the new and pre-owned vehicle

financing industry could adversely affect our business and results of operations.

We are primarily engaged in providing financing for new auto and utility vehicles (including three wheelers),

tractors, cars, commercial vehicles, construction equipment and pre-owned vehicles to customers in rural and

semi-urban markets. For the financial years 2020 and 2019, the estimated total value of assets financed by

our Company was ₹ 423,881.92 million and ₹ 462,103.17 million, respectively, our Company’s revenue from

operations was ₹ 100,978.52 million and ₹ 87,229.09 million, respectively and total profit after tax for the

year was ₹ 9,064.04 million and ₹ 15,570.64 million, respectively. Our subsidiaries MRHFL, MIBL and

MMIMPL operate in the housing finance, insurance distribution and asset management industries,

respectively. Our asset portfolios include, and will likely continue to include, a high concentration of

financing arrangements for vehicles in rural and semi-urban markets. The success of our business thus

depends on various factors that affect demand for such vehicles, including the demand for transportation

services in India, the housing and the insurance market in India, changes in Indian regulations and policies

affecting utility vehicles, tractors, commercial vehicles and cars, natural disasters, calamities, pandemics such

as COVID-19 which has shut down large parts of Indian economy and may have adverse impact on rural

economy in the short and mid-term, fuel prices and other macroeconomic conditions in India and globally.

Moreover, demand for such vehicles from our customers who are individuals or small enterprises that

typically have less financial wherewithal than corporate borrowers or fleet owners, or demand for rural

housing, is more likely to be adversely affected by these factors. This may result in a decline in the sales or

value of new and pre-owned vehicles. In addition, COVID-19 has caused a significant decline in the demand

23

for heavy commercial vehicles as well as light commercial vehicles utilized by medium and small fleet

operators. Such factors may also affect the business of our customers, which in turn will affect their ability

to perform their obligations under the existing financing agreements. Any decline in sales of, or in demand

for financing for, utility vehicles, tractors, cars or commercial vehicles or non-performance of the existing

financing agreements could adversely affect our business and results of operations.

4. Our inability to compete effectively in an increasingly competitive industry may adversely affect our net

interest margins, income and market share.

We provide loans primarily to customers residing in rural and semi-urban markets. Our primary competitors

have been private unorganized lenders who typically operate in rural and semi-urban markets. However, as

banks, other NBFCs and housing finance companies continue to expand their operations in rural and semi-

urban markets, we face competition from such entities, some of which may have superior technology

platforms, more resources, access to cheaper funding, expanded their reach to rural and semi-urban markets

and may have a better understanding of and relationships with customers in these markets. This may make it

easier for competitors to expand and to achieve economies of scale to a greater extent. In addition, our

competitors may be able to rely on the reach of the retail presence of their affiliated group companies or

banks. Competition has also increased as a result of interest rate deregulation and other liberalization

measures affecting the vehicle financing and housing finance sectors and we expect competition to intensify

in the future. We also face increasing competition in our insurance broking, mutual fund and SME financing

businesses.

Our ability to compete effectively will depend, in part, on our ability to maintain or increase our margins.

Our margins are affected in part by our ability to continue to secure low-cost capital, and charge optimum

interest rates at which we lend to our customers. Consequently, our ability to maintain or increase our

margins will be dependent on our ability to pass on increases in the interest rates on our interest-bearing

liabilities to our customers. Moreover, any increases in the interest rates on the loans we extend may also

result in a decrease in business.

We believe that the strong recognition of the “Mahindra” brand provides a significant competitive advantage

to us and ensures a steady inflow of business. In the event Mahindra group is unable to maintain the quality

of its services or its goodwill deteriorates for any reason whatsoever, our business and results of operations

may be adversely affected. We cannot assure you that we will be able to react effectively to these or other

market developments or compete effectively with new and existing players in the increasingly competitive

industry. Increasing competition may adversely affect our net interest margins, income and market share.

5. The risk of non-payment or default by borrowers may adversely affect our financial condition and results

of operations.

Our customers are primarily in the rural and semi-urban markets of India and without formal credit histories.

Such customers typically have less financial wherewithal and may be particularly susceptible to adverse

macro-economic conditions, particularly on account of events such as COVID-19. As of March 31, 2020,

our Company’s total gross loans and advances were ₹ 680,761.99 million and we expect that the size of our

gross loans and advances will grow as a result of our expansion strategy in existing as well as new products,

which will expose us to an increased risk of defaults. This, as well as any deterioration in the financial

condition of our borrowers, particularly on account of COVID-19 in recent months may result in an increase

in our NPAs. Any such increase may adversely affect our credit ratings and increase our borrowing costs,

which in turn may affect our interest margins, business and results of operations.

Our Company classifies NPAs in accordance with applicable Ind AS rules and the RBI guidelines on

COVID-19 – Regulatory Package. Defaults by our customers for a period of more than 90 days result in

such loans being classified as ‘non-performing’. Our Company’s Gross NPAs (Stage 3 assets) were ₹

57,467.39 million, or 8.4% of our gross business assets as of March 31, 2020. Our Company’s provision for

NPA (Stage-3 assets) was ₹ 17,802.64 million as of March 31, 2020.

MRHFL classifies NPAs in accordance with applicable Ind AS rules and the RBI guidelines on COVID-19

– Regulatory Package. Defaults by the customers of MRHFL for a period of more than 90 days result in such

loans being classified as ‘non-performing’. MRHFL’s Gross NPAs (Stage 3 assets) were ₹ 12,772.12

million, or 15.1% of MRHFL’s gross business assets as of March 31, 2020. MRHFL’s provision for NPA

(Stage - 3 assets) was ₹ 4,145.12 million as of March 31, 2020.

24

If our provisioning requirements are insufficient to cover our existing or future levels of non-performing

loans, or if future regulations require us to increase our provisions, our ability to raise additional capital and

debt funds as well as our results of operations and financial condition could be adversely affected.

The borrowers and their guarantors under our loan agreements may default in their repayment obligations

due to various reasons including insolvency, lack of liquidity, increase in operating costs, business failure or

poor agricultural production. Besides macroeconomic conditions, we face risks specific to each line of

business, which may also result in increased defaults. In addition, our customers often do not have credit

histories supported by tax returns and other documents that would enable us to assess their creditworthiness,

and we may not receive updated information regarding any change in the financial condition of our customers

or may receive inaccurate or incomplete information as a result of any fraudulent misrepresentation by our

customers or employees. This segment of customers also has limited access to other financing sources and is

located in the rural and semi-urban markets. It may therefore be difficult to carry out precise credit risk

analyses on all of our customers.

Although we follow certain procedures to evaluate the credit profiles of our customers at the time of

sanctioning a loan, we typically rely on a system of referrals from the local community and the value of the

vehicle provided as underlying collateral rather than focusing solely on the credit profile of our customers.

Further, due to the COVID-19 pandemic and a complete or partial closure of our offices, we may be unable

to obtain adequate information about our customers for evaluating their credit profiles. Further, our Company

had unsecured loans outstanding aggregating to ₹ 27,441.03 million, as of March 31, 2020. Consequently,

non-payment or default by borrowers could adversely affect business, results of operations and financial

condition.

6. We are affected by volatility in interest rates for both our lending and treasury operations, which could

cause our net interest income to decline and adversely affect our return on assets and profitability.

A significant component of our total income is the interest and fee income we receive from the secured and

unsecured loans we disburse, which comprised 96.1% and 96.4% of our total income for the financial years

2020 and 2019, respectively. Interest rates are highly sensitive to many factors beyond our control, including

the monetary policies of RBI, deregulation of the financial sector in India, domestic and international

economic and political conditions and other factors, which have historically generated a relatively high degree

of volatility in interest rates in India. Moreover, if there is an increase in the interest rates we pay on our

borrowings that we are unable to pass to our customers, we may find it difficult to compete with our

competitors, who may have access to low-cost funds. Further, to the extent our borrowings are linked to

market interest rates, we may have to pay interest at a higher rate than lenders that borrow only at fixed

interest rates.

Fluctuations in interest rates may also adversely affect our treasury operations. In a rising interest rate

environment, especially if the rise is sudden or sharp, we could be adversely affected by the decline in the

market value of our securities portfolio and other fixed income securities. In addition, the value of any interest

rate hedging instruments we may enter into in the future would be affected by changes in interest rates, which

could adversely affect our ability to hedge against interest rate volatility. We cannot assure that we will

continue to enter into such interest rate hedging instruments or that we will be able to enter into the correct

amount of such instruments to adequately hedge against interest rate volatility in the future.

Further, pursuant to our loan agreements with customers, we primarily lend money on fixed interest rate basis,

typically without including a provision that interest rates due under our loan agreements will increase if

interest rates in the market increase. Our inability to effectively and efficiently manage interest rate variations

and our failure to pass on increased interest rates on our borrowings may cause our net interest income to

decline, which would decrease our return on assets and could adversely affect our business, future financial

performance and result of operations.

7. Our inability to recover the full value of collateral or amounts outstanding under defaulted loans in a

timely manner or at all could adversely affect our results of operations.

For each vehicle financing arrangement, we sanction an amount of credit that is less than the value of the

vehicle which we take as collateral. We regulate this amount through our restrictions on the loan to value

25

(“LTV”) ratio of each financing. We take other collateral such as houses as collateral against the credit that

we extend in our housing finance business. The value of the collateral, however, may decline during the term

of the loan for a variety of reasons, including depreciation and deterioration. In addition, an overall

deterioration in the economy may also lead to a reduction in the value of collateral provided for our loans,

leading to higher than anticipated losses on default. As a result, if our customers default, we may receive less

money from liquidating collateral than is owed under the relevant financing facility, and, in turn, incur losses,

even where we successfully repossess and liquidate the collateral. While we require borrowers to secure a

guarantee on the basis of their profile, we may not be able to enforce or collect the amount owed under such

guarantee, if at all. Further, as our unsecured loan portfolio is not supported by any collateral, in the event of

non-payment by borrowers under these loans, we may be unable to collect the outstanding amount.

We may also encounter difficulties in repossessing and liquidating collateral. When a customer defaults under

a financing facility, we typically re-possess and then sell the collateral through an auction. There is no

assurance, however, that we will be able to successfully repossess the collateral in the event of default under

a loan agreement. We may also not be able to sell the collateral at a price sufficient to cover the amount owed

under the financing facility, or at all. We may face additional delay and expense in conducting an auction to

sell the collateral and may face significant delay in repossessing collateral, as litigation against defaulting

customers, even if governed by an arbitration clause, can be slow and expensive in India. In the event of any

inability or delay in the repossession and liquidation of the collateral securing loans in default, we may incur

losses, which could adversely affect our results of operations and financial condition.

8. Priority sector lending requirements adhered to by scheduled commercial banks may increase our cost of

funding and adversely affect our business, results of operations and financial condition.

Pursuant to the Reserve Bank of India (Priority Sector Lending–Targets and Classification) Directions, 2016

dated July 7, 2016, as updated, scheduled commercial banks operating in India are required to maintain 40%

of their adjusted net bank credit or credit equivalent of their off balance sheet exposure, whichever is higher,

as priority sector advances. These include loans to the agriculture, micro and small enterprises, low-income

housing projects, off-grid renewable energy, exports and similar sectors where the Government seeks to

encourage the flow of credit to stimulate economic development in India. Commercial banks in the past have

relied on specialized institutions, including microfinance institutions and other financing companies including

NBFCs, to provide them with access to qualifying advances through lending programs and loan assignments,

which may lead to more competition for us and may adversely affect our business and results of operations.

Any such changes in priority sector guidelines by RBI may adversely affect our business and operations.

While scheduled commercial banks may still choose to lend to NBFCs, they may charge higher rates to do so

because these loans no longer count towards their priority sector lending requirements. This may lead to an

increase in the rates at which such loans have historically been offered to us, thus increasing our borrowing

costs and adversely affecting our financial condition and results of operation.

As a result of such developments, our access to funds and the cost of our capital has been adversely affected

and to the extent we are unable to secure replacement funding at similar cost or at all, our results of operations

would be adversely affected.

9. We may be unsuccessful in expanding into new lines of business and implement our new business

strategies, which could adversely affect our business and prospects.

We continue to pursue opportunities to expand into new lines of business. For example, we have recently

started offering small ticket size consumer durable and personal loans. We also incorporated an asset

management company and during the financial year 2016, we obtained a certificate of registration as a

registered mutual fund from SEBI. However, our growth strategies may require new regulatory approvals and

strain our resources. Moreover, neither we, nor our Promoter have significant operational experience in the

mutual fund sector. In addition, we commenced our leasing business through the leasing of electric vehicles

in certain geographies in 2017. We further expanded our leasing business to other product segments such as

passenger cars, commercial vehicles and construction equipment. We may also pursue new business strategies

in the future such as opening new offices, increasing our presence in rural centres and introduce new products

and services. Pursuing such business opportunities will require significant capital, which we may not be able

to raise in a timely manner, or at all. We cannot assure you that we will be successful in expanding these new

lines of business, which could adversely affect our business, operations and profitability.

26

10. Our vehicle financing business relies on the demand for M&M vehicles, including tractors, any decline

in the sale or quality of which could adversely affect our business and results of operations.

For the financial years 2020 and 2019, 39.9% and 41.2% of our estimated total value of assets financed were

provided to purchasers of M&M vehicles, including tractors, respectively. However, there has been a

significant decline in the sale of such vehicles on account of the COVID-19 pandemic and the lockdown that

has been enforced in India. We also finance the purchase of construction equipment manufactured by M&M.

Consequently, our business depends on the success of the distribution and marketing network and brand

equity of M&M, particularly in rural and semi-urban markets. Customers may also delay or default on their

payments due to us on account of technical failures of their vehicles or equipment because they associate

these failures with M&M and, in turn, with us. M&M’s inability to maintain and expand its own distribution

network or increase its sales; continue to anticipate and respond effectively to challenges posed by the Indian

vehicle industry, particularly in rural and semi-urban markets, or any decline in sale of rural models in M&M

portfolio could adversely affect our business and results of operations.

11. We may experience difficulties in expanding our business into new regions and markets in India and

abroad.

As part of our growth strategy, we will continue to evaluate opportunities in the future to expand our business

into new markets in India and abroad. Factors such as competition, customer requirements, regulatory

regimes, business practices and customs in these new markets may differ from those in our existing markets,

and our experience in our existing markets may not be applicable to these new markets. In addition, as we

enter new markets and geographical regions, we are likely to compete with not only other banks and financial

institutions but also the local unorganized or semi-organized private financiers, who are more familiar with

local regulations, business practices and customs, and have stronger relationships with target customers.

As we plan to expand our geographic footprint, our business may be exposed to additional challenges,

including obtaining necessary governmental approvals, identifying and collaborating with local business

partners with whom we may have no existing relationship; successfully marketing our products in markets in

which we have no familiarity; attracting customers in a market in which we do not have significant experience

or visibility; being subject to additional local taxes; attracting and retaining new employees; expanding our

technological infrastructure; maintaining standardized systems and procedures; and adapting our marketing

strategy and operations to new markets in India in which different languages are spoken. To address these

challenges, we may have to make significant investments that may not yield desired results or incur costs that

we may not be able to recover. Our inability to expand our current operations may adversely affect our

business, financial conditions, and results of operations.

12. A significant portion of our collections from customers is in cash, exposing us to certain operational risks.

A significant portion of our collections from our customers is in cash. Large cash collections expose us to the

risk of theft, fraud, misappropriation or unauthorized transactions by employees responsible for dealing with

such cash collections. These risks are exacerbated by the high levels of responsibility we delegate to our

employees and the geographically dispersed nature of our network. We primarily cater to customers in rural

and semi-urban markets, which carry additional risks due to limitations on infrastructure and technology.

While we have implemented technology that tracks our cash collections, taken insurance policies, including

fidelity coverage and coverage for cash in safes and in transit, and undertaken measures to detect and prevent

unauthorized transactions, fraud or misappropriation, this may not be sufficient to prevent or deter such

activities in all cases, which may adversely affect our operations and profitability. Further, we may be subject

to regulatory or other proceedings in connection with any unauthorized transactions, fraud or

misappropriation by our representatives and employees, which could adversely affect our goodwill. We may

also be party to criminal proceedings and civil litigation related to our cash collections. A penalty may be

imposed on us under section 269ST of the Income Tax Act, 1961 for cash collections exceeding ₹ 200,000

in a single transaction.

Our business is also susceptible to fraud by dealers, distributors and other agents through the forgery of

documents, multiple financing of the same vehicle and unauthorized collection of instalments on behalf of

our Company. Given the high volume of transactions involving cash processed by us, certain instances of

fraud and misconduct by our representatives or employees may go unnoticed for some time before they are

discovered and successfully rectified. Even when we discover instances of fraud and other misconduct and

27

pursue legal recourse or file claims with our insurance carriers, we cannot assure you that we will recover

any amounts lost through such fraud or other misconduct. Our dependence upon automated systems to record

and process transactions may further increase the risk that technical system flaws or employee tampering or

manipulation of such systems will result in losses that are difficult to detect or rectify.

13. Any downgrade in our credit ratings could increase borrowing costs and adversely affect our access to

capital and lending markets and could also affect our interest margins, business, results of operations


The cost and availability of capital depends in part on our short-term and long-term credit ratings. Credit

ratings reflect the opinions of ratings agencies on our financial strength, operating performance, strategic

position and ability to meet our obligations. Certain factors that influence our credit ratings may relate to the

nature of our business and may be outside of our control. For example, our credit ratings may depend on the

financial performance and business prospects of M&M and its majority shareholding in our Company. Our

Company’s long-term and subordinated debt is presently rated IND AAA, IND PP-MLD AAA emr, CARE

AAA and CRISIL AA+ by India Ratings & Research Private Limited, Credit Analysis & Research Limited

and CRISIL, respectively, and our long term subordinated debt is presently rated BWR AAA by Brickwork

Ratings India Private Limited. India Ratings & Research Private Limited and CRISIL has rated our

Company’s short-term debt as IND A1+ and CRISIL A1+, respectively, which is the highest rating for short-

term debt instruments, and CRISIL has rated our Company’s fixed deposit program FAAA.

Any downgrade in our credit ratings or the credit ratings of India, could increase our borrowing costs and

adversely affect our access to capital and debt markets, which could in turn adversely affect our interest

margins, business and results of operations. In addition, any downgrade in our credit ratings could increase

the probability that our lenders impose additional terms and conditions to any financing or refinancing

arrangements we enter into in the future and adversely affect our business, results of operations, financial

condition.

14. Changes in environmental or other laws may lead to a decline in the sale of vehicles, which could

adversely affect our business, results of operations and prospects.

Our Company is primarily engaged in vehicle financing across various states in India. Any regulation passed

by either the central Government or any of the state Governments, or any orders of judiciary to ban the sale

of certain vehicles that do not comply with specific emission standards or impose additional taxes on any

particular segment of vehicles, could lead to a decline in the sales of such vehicles. Further, any regulation

passed by either the central Government or any of the state Governments to only permit the production of

vehicles that meet a specified standard, could increase costs to produce such vehicles and lead to a decline in

the sales of other vehicles. For example, only 10% of the inventory of vehicles not complying with Bharat

Emission Standards IV were permitted to be sold beyond March 31, 2020 (except in Delhi and NCR region)

and vehicles complying with Bharat Emission Standards VI were permitted to be sold with effect from April,

2020. Such regulatory amendments or orders of the judiciary may lead to a decline in our disbursements and

adversely affect our business, results of operations and prospects.

15. Our Company and Subsidiaries are involved in certain legal and other proceedings and there can be no

assurance that our Company and / or Subsidiaries will be successful in any of these legal actions. Any

adverse outcome in such proceedings may have an adverse effect on our business, results of operations


Our Company and our Subsidiaries are impleaded in a number of legal and regulatory proceedings that, if

determined against our Company or our Subsidiaries could have an adverse effect on our business, results of

operations, cash flows and financial conditions. For further details, see “Outstanding Litigation and Defaults”

on page 326 and for a summary of such outstanding legal proceedings involving our Company and our

Subsidiaries, as on the date of this Letter of Offer, including the aggregate approximate amount involved to

the extent ascertainable, see “Summary of this Letter of Offer” on page 17.

Any adverse decision in any of these cases may adversely affect our business and financial condition. We

cannot assure you that the outcome of these legal proceedings will be favourable. Such litigation could

consume our financial resources in their defence or prosecution. In addition, should any new developments

arise, such as changes in Indian law or rulings against us by the regulators, appellate courts or tribunals, we

28

may need to make provisions in our financial statements, which could increase our expenses and current

liabilities. If we fail to successfully defend our claims or if our provisions prove to be inadequate, our business,

results of operations and financial condition could be adversely affected.

16. Developments in the regulations concerning securitization and assignment transactions with respect to

receivables of our loan assets could adversely affect the viability of funding from such transactions, our

results of operations and financial condition.

We have in the past securitized/assigned a portion of the receivables from our loan assets to banks. During

the financial years 2020 and 2019, our Company has entered into securitization transactions amounting to ₹

77,215.98 million and ₹ 43,891.97 million, respectively. Any change in statutory or regulatory requirements

in relation to securitization or assignments by financial institutions, including the requirements prescribed by

RBI, could have an adverse impact on our assignment or securitization transactions. The commercial viability

of assignment and securitization transactions may get affected by changes and developments relating to

regulation governing such transactions. Such changes include:

• prohibition on NBFCs such as our Company from offering credit enhancements in any form and

liquidity facilities in the case of loan transfers through direct assignment of cash flows;

• minimum holding period or ‘seasoning’ and minimum retention requirements of assignment and

securitization loans; and

• securitization/assignments shall be eligible for classification under priority sector only if the interest rate

charged to the ultimate borrower by the originating entity does not exceed base rate of such bank plus

8% per annum.

These developments have significantly limited the attractiveness of assignment and securitization

transactions, which could adversely affect our ability to secure funding from such transactions at

commercially viable rates, or at all, and our results of operations and financial condition.

17. We depend on the services of our management team and employees, our inability to recruit and retain

them may adversely affect our business.

Our future success depends substantially on the continued service and performance of members of our

management team and employees and also upon our ability to manage key issues relating to human resource

such as selecting and retaining key managerial personnel, developing managerial experience, addressing

emerging challenges and ensuring a high standard of client service. There is intense competition for

experienced senior management and other qualified personnel, particularly office managers, field executives

and employees with local knowledge in client procurement, loan disbursement and installment collections. If

we cannot hire additional or retain existing management personnel and employees, our ability to expand our

business will be impacted and our revenue could be adversely affected. Failure to train and motivate our

employees properly may result in an increase in employee attrition rates, require additional hiring, divert

management resources, adversely affect our origination and collection rates, increase our exposure to high-

risk credit and impose significant costs on us. Our attrition rates may also increase should there be any

reduction in employee salaries on account of the COVID-19 pandemic. While we have an incentive based

remuneration structure, employee stock option scheme and training and development programs designed to

encourage employee retention, our inability to attract and retain talented professionals, or the resignation or

loss of key management personnel, may have an adverse impact on our business, future financial

performance. Our future success also depends on our ability to replace retiring members of our senior

management team with suitable personnel. For example, V. Ravi, our Company’s Executive Director and

Chief Financial Officer, will retire with effect from July 25, 2020. We have appointed Vivek Karve as the

Chief Financial Officer of our Company with effect from September 14, 2020. However, there cannot be any

assurance that we will be able to hire suitable replacements for retiring members of our senior management

team in a timely manner, which may adversely affect our business and results of operations may be adversely

affected.

As of March 31, 2020, our Company employed 21,862 employees and our Subsidiaries employed 10,820

employees. Though we believe that we maintain good relationship with our employees, we cannot assure you

that we will not experience future disruptions to our operations due to disputes or other problems with our

work force, which may adversely affect our business and result operations.

62

Exceptional item 61.01 -

-

Profit before tax 2,080.89 1,047.03 98.7% 13,437.62

Tax expense 522.97 362.71 44.2% 4,373.58

Profit after Taxes for the period /

year

1,557.92 684.32 127.7% 9,064.04

New Contracts and estimated value of assets financed (standalone)

The following table sets forth the new contracts and estimated value of assets financed by our Company, on a

standalone basis, during the three months ended June 30, 2020 and 2019:

Particulars For the three months ended

June 30, 2020 June 30, 2019

New contracts during the period

(number of contracts)

46,190 180,948

Estimated value of assets financed (in

₹ million)

34,891.82 105,982.59

Estimated Composition of Assets Financed

Our Company’s estimated composition of assets financed for the three months ended June 30, 2020 and 2019

is set forth below:

Three months ended June 30,

2020 2019

Auto and Utility Vehicles (including three wheelers) 22.8% 27.2%

Tractors 33.7% 17.0%

Cars 15.6% 19.5%

Commercial Vehicles and Construction Equipment 6.2% 18.1%

Pre-owned Vehicles 2.9% 16.2%

SME and others 18.8% 2.0%

Loan Assets and Estimated Value of Assets financed by Geography

As of June 30, 2020, the north, south, west, central and eastern regions of India contributed 29%, 20%, 15%, 10%

and 26% of our Company's loan assets, respectively.

Further, during the three months ended June 30, 2020, our estimated value of assets financed in the north, south,

west, central and eastern regions of India accounted for 25%, 14%, 27%, 12% and 22% of our Company's total

estimated value of assets financed, respectively.

Liability Mix

Funding mix by type of instrument

Particulars As of June 30, 2020

Amount (₹ in million) % share

NCDs 178,907.59 28.2%

Retail NCDs 42,576.88 6.7%

Bank loans 175,622.90 27.7%

External commercial borrowings 37,935.49 6.0%

Rupee denominated secured bonds

overseas (masala bonds) 3,495.72 0.6%

Fixed deposits 89,003.33 14.0%

Commercial paper, inter-corporate

deposits 20,807.77 3.3%

Associated liabilities in securitization

transactions 85,167.12 13.4%

Total 633,516.80 100.0%

63

Asset Liability Maturity Profile

The following table sets forth a summary of our Company’s asset and liability maturity profile, as of June 30,

2020:

Up to

One

Month

Up to

Two

Months

Up to

Three

Months

Up to

Six

Months

Between

One

Month

and One

Year

Between

One and

Three

Years

Between

Three

and Five

years

Over

Five

Years

Total

Cumulative

Mismatch (₹ in

billion)

14,262 20,397 33,652 39,255 67,448 78,197 115,775 14,262 20,397

Cumulative

Surplus (Deficit)

(in %)

60% 50% 55% 37% 34% 17% 22% 60% 50%

Note: Extracts from Asset Liability Maturity profile prepared as per previous GAAP and IRACP norms prescribed

by RBI and filed on a provisional basis with the RBI.

Liability Maturity Profile

The following table sets forth a summary of our Company’s liability maturity profile as at June 30, 2020 on the

basis of cash flows for the following six months:

Liability

Maturity

July

2020

August

2020

September

2020

Three

months

ended

September

30, 2020

October

2020

November

2020

December

2020

Three

months

ended

December

31, 2020

July –

Dec

2020

Bank

loans#

9,261 8,461 9,556 27,279 218 1,238 9,217 10,673 37,951

Market

instruments

(NCDs and

commercial

papers)

8,920 6,798 7,573 23,291 5,000 5,000 10,010 20,010 43,301

Others

(including

fixed

deposits)

1,343 1,534 1,249 4,126 1,392 1,479 2,923 5,794 9,920

Total 19,524 16,794 18,378 54,696 6,610 7,717 22,150 36,477 91,173 #Excluding securitization

Key Ratios

The following table sets forth certain key ratios of our Company, on a standalone basis, as of and for the three

months ended June 30, 2020 and 2019:

Particulars As of and for the three months ended June 30,

2020 2019

Total income / Average assets^ 14.01% 14.19%

Interest / Average assets^ 6.67% 6.63%

Gross spread 7.34% 7.55%

Overheads / Average assets^ 1.82% 3.29%

Write offs and NPA or impairment provisions on financial

assets / Average assets^ 4.44% 3.64%

Net spread 1.07% 0.62%

Net spread after tax 0.80% 0.40%

Cost to income ratio(1) 24.86% 43.60%

Debt to equity ratio 5.49:1 4.99:1

Return on assets(2) 0.80% 0.40%

64

Particulars As of and for the three months ended June 30,

2020 2019

Return on net worth (Average net worth) 5.30% 2.50%

Loans secured by tangible assets # (₹ in million) 659,229.34 615,925.22

Earnings per share (basic) (₹) 2.53 1.11

Earnings per share (diluted) (₹) 2.53 1.11

Book value per share (₹) (3) 186.67 177.64

1. Cost to income is calculated as operating expenses (including depreciation)/ (Net Interest Income + Other Income)

2. Calculated based on average total assets

3. Calculated as shareholders fund / number of shares

^Average Assets is computed a simple average of total assets as per balance sheet at the beginning and at the end of the financial year

#Loanssecured by tangible assets include loans and advances (including overdue loans) under retail vehicle finance, house finance and SME finance businesses before

deduction of impairment loss allowances

Capital Adequacy

The following table sets forth the capital adequacy ratios of our Company, as of June 30, 2020 and 2019:

Particulars As of June 30,

2020 2019

CAR – Tier I 15.3% 14.9%

CAR – Tier II 4.3% 4.5%

NPA (Stage- 3 asset) and other related details – MMFSL (standalone)

The following table sets forth our Company’s non-performing assets, on a standalone basis, as of the dates

indicated:

(₹ in million, other than percentages and operational data)

Particulars June 30,

2020 2019

Gross business assets (including provisions)(1) 676,718.45 648,199.99

Gross NPA (Stage – 3 assets) 62,184.07 52,952.30

Impairment provision for NPA (Stage – 3 assets) 24,921.96 13,163.55

Net NPA (Stage – 3 assets) 37,262.11 39,788.75

Gross NPA (Stage – 3 assets) to Gross business assets 9.2% 8.2%

Net NPA (Stage – 3 assets) to Net business assets(2) 5.7% 6.3%

Provision coverage ratio (%) (based on stage 3 asset impairment

provisions)

40.1% 24.9%

Impairment provision for Stage 1 and 2 assets 13,322.95 11,094.22

Stage 1 and 2 assets’ impairment provisions to Gross NPA (Stage 3

assets) (%)

21.4% 21.0%

Provision coverage ratio (%) - including stage 1 and 2 assets

impairment provisions

61.5% 45.8%

Contracts under NPA (Stage – 3 assets) 143,080 134,939

% of live cases under NPA (Stage – 3 assets) 5.4% 5.6%

Repossessed assets (out of above NPA (Stage – 3 assets)) 9,426 11,143 (1) Gross business assets includes gross loans and advances and trade receivables (2) Net business assets represents Gross business assets less impairment provisions

Note: Our Company considers a financial asset to be in "default" or NPA and therefore Stage 3 (credit impaired asset) for Expected Credit

Loss calculations when the borrower becomes 90 days past due on its contractual payments.

Details of provisioning as per IRACP and Ind AS as at June 30, 2020

The following table sets forth the details of our Company’s impairment provisioning for NPAs as per IRACP and

Ind AS, on a standalone basis, as of June 30, 2020.

(₹ in million) Provisioning (as on June

30, 2020) IRACP(1) (A) Ind-AS (B) Difference (B-A)

Stage 1 and Stage 2 9,514.14 13,322.95 3,808.81

65

Stage 3 25,575.91 24,921.96 -653.95

Total 35,090.05 38,244.91 3,154.86 (1) Income recognition, asset classification and provisioning

Employees

As of June 30, 2020 and 2019, our Company employed 21,431 and 22,005 employees, respectively.

Office Network

As of June 30, 2020, our Company had 1,324 offices located in 27 states and seven union territories in India.

II. MRHFL

The following table sets out certain metrics about MRHFL:

(₹ in million, except operational data)

Particulars As of and for the three months ended

June 30, 2020 June 30, 2019

Loans disbursed - 4,975.99

Number of customer contracts - 24,911

Gross business assets (including

provisions)(1)

84,619.95

82,918.64

Total income 3,852.10 3,630.54

Profit before tax 566.74 410.60

Profit after tax 476.89 287.54

Net worth 12,966.46 11,559.52

Gross NPA (Stage – 3 assets) to Gross

business assets

15.50% 16.24%

Net NPA (Stage – 3 assets) to Net

business assets(2)

9.99% 13.32%

(1) Gross business assets represents gross loans and advances (2) Net business assets represents Gross business assets less impairment provision

III. MIBL

The following table sets out certain metrics about MIBL:

(₹ in million, except operational data)

Particulars For the three months ended

June 30, 2020 June 30, 2019

Total income 412.02 796.33

Profit before tax 26.67 88.18

Profit after tax 19.77 61.59

66

GENERAL INFORMATION

Our Company was originally incorporated as “Maxi Motors Financial Services Limited” on January 1, 1991 as a

public limited company under the Companies Act, 1956 and was granted a certificate of incorporation by the RoC.

Thereafter, our Company received its certificate of commencement of business from RoC on January 19, 1991.

Subsequently, the name of our Company was changed to “Mahindra & Mahindra Financial Services Limited”

and a fresh certificate of incorporation consequent upon change of name was granted to our Company by RoC on

November 3, 1992. Our Company is registered as an asset finance - deposit accepting non-banking financial

company with RBI under Section 45-IA of the Reserve Bank of India Act, 1934. For details, see “History and

Corporate Structure” on page 108.

Registered Office, Corporate Office, CIN and Registration Number of our Company

Registered Office

Gateway Building

Apollo Bunder

Mumbai 400 001

Corporate Office

4th Floor, A Wing

Mahindra Towers, Dr. G. M. Bhosale Marg

P K. Kurne Chowk, Worli

Mumbai 400 018

CIN: L65921MH1991PLC059642

MCA Registration Number: 059642

RBI Registration Number: 13.00996

Address of the Registrar of Companies

Our Company is registered with the RoC, which is situated at the following address:

Registrar of Companies

100, Everest

Marine Drive

Mumbai 400 002

Maharashtra

Our Board of Directors

The following table sets out the details of our Board of Directors as of the date of this Letter of Offer:

Name Designation DIN Address

Dhananjay Mungale Chairman and Independent Director 00007563 A-10, Ameya Apartments, Near Kirti

College, Dadar West, Mumbai, 400 028,

Maharashtra.

Ramesh Iyer Vice-Chairman and Managing

Director

00220759 D-1502, Milano Tower, Lodha Fiorenza,

Western Express Highway, near Hub Mall,

Goregaon East, Mumbai- 400 063,

Maharashtra.

V. Ravi Executive Director and Chief

Financial Officer

00307328 A-4, Plot No. NA-52, New Samrat Society,

Andheri Kurla Road, Opp. Vishal Hall,

Andheri (East), Mumbai, 400 069,

Maharashtra

V.S. Parthasarathy Non-Executive and Non-

Independent Director

00125299 3404, Indiabulls Sky, Senapati Bapat Marg,

Elphinstone West, Elphinstone Road,

Delisle Road, Mumbai, 400 013,

Maharashtra.

Anish Shah Non-Executive and Non-


02719429 D-3603 Vivarea, Sane Guruji Marg,

Mahalakshmi, Jacob Circle, Mumbai, 400

011, Maharashtra.

67

Name Designation DIN Address

Chandrashekhar

Bhaskar Bhave

Independent Director 00059856 64, Tower 4, Pebble Bay, 1st Main, Dollars

Colony, RMV 2nd Stage, Bengaluru North,

R.M.V. Extension II Stage, Bengaluru, 560

094, Karnataka.

Rama Bijapurkar Independent Director 00001835 8 CD, Mona Apartments, 46F, Bhulabhai

Desai Road, Near Mahalaxmi Temple,

Cumballa Hill, Mumbai, 400 026,

Maharashtra.

Arvind Sonde Independent Director 00053834 1802/B, 18th Floor, Vivarea, Sane Guruji

Marg, Saat Rasta, Jacob Circle, Mahalaxmi,

Mumbai, 400 011, Maharashtra.

Milind Sarwate Independent Director 00109854 E-201/202, Sita Vihar, Near Damani Estate,

LBS Marg, Near Hotel Shubha Naupada,

Thane (West), 400 602, Maharashtra.

Company Secretary and Compliance Officer

Arnavaz M. Pardiwalla

4th Floor, A Wing

Mahindra Towers, Dr. G. M. Bhosale Marg

P. K. Kurne Chowk, Worli

Mumbai 400 018

Maharashtra

Telephone: +91 22 6652 6000


Lead Managers to the Issue

Kotak Mahindra Capital Company Limited

1st Floor, C-27 BKC, Plot No. 27, G Block

Bandra Kurla Complex, Bandra (East)

Mumbai 400 051

Telephone: +91 (22) 4336 0000



Contact Person: Ganesh Rane

Website: www.investmentbank.kotak.com



1st Floor, Axis House

C-2 Wadia International Centre

Pandurang Budhkar Marg

Worli, Mumbai 400 025

Telephone: +91 (22) 4325 2183



Contact Person: Mayuri Arya

Website: www.axiscapital.co.in


BNP Paribas

BNP Paribas House, 1-North Avenue

Maker Maxity, Bandra Kurla Complex Bandra (E),

Mumbai 400 051

Telephone: +91 (22) 3370 4000



[email protected]

Contact Person: Mehul Golwala

Website: www.bnpparibas.co.in


Citigroup Global Markets India Private Limited

1202, 12th Floor, First International Financial Center

G-Block, C 54 & 55

Bandra Kurla Complex

Bandra (East), Mumbai 400 098

Maharashtra, India

Telephone: +91 (22) 6175 9999



Contact Person: Abhay Agrawal

Website:www.online.citibank.co.in/rhtm/citigroupglobals

creen1.htm


68

HDFC Bank Limited

Investment Banking Group

Unit 401&402, 4th Floor, Tower B

Peninsula Business Park, Lower Parel

Mumbai 400 013

Maharashtra, India

Telephone: +91 (22) 3395 8233



[email protected]

Contact Person: Ravi Sharma/Harsh Thakkar

Website: www.hdfcbank.com


HSBC Securities and Capital Markets (India) Private

Limited

52/60, Mahatma Gandhi Road, Fort, Mumbai 400 001

Maharashtra, India

Telephone: +91 (22) 2268 5555



Contact Person: Ayush Jain/Sanjana Maniar

Website:https://www.business.hsbc.co.in/en-

gb/in/generic/ipo-open-offer-and-buyback


ICICI Securities Limited

ICICI Center, H T Parekh Marg

Churchgate

Mumbai 400 020

Maharashtra, India

Tel: +91 22 2288 2460


Investor grievance e-mail:

[email protected]

Website: www.icicisecurities.com

Contact Person: Rishi Tiwari/ Nidhi Wangnoo


Nomura Financial Advisory and Securities (India)

Private Limited

Ceejay House, Level 11 Plot F, Shivsagar Estate

Dr. Annie Besant Road, Worli

Mumbai 400 018

Maharashtra, India

Tel: +91 22 4037 4037


Investor grievance e-mail: investorgrievances-

[email protected]

Website:www.nomuraholdings.com/company/

group/asia/india/index.html

Contact Person: Vishal Kanjani/Prithvi Ghag


SBI Capital Markets Limited

202, Maker Tower ‘E’

Cuffe Parade

Mumbai 400 005

Maharashtra, India

Telephone: +91 (22) 2217 8300



[email protected]

Contact Person: Sylvia Mendonca/Aditya Deshpande

Website: www.sbicaps.com


Domestic Legal Counsel to our Company

Khaitan & Co

One Indiabulls Centre

10th and 13th

Floor, Tower 1

841, Senapati Bapat Marg

Mumbai 400 013

Maharashtra

Telephone: +91 (22) 6636 5000

Domestic Legal Counsel to the Lead Managers

Cyril Amarchand Mangaldas

5th floor, Peninsula Chambers

Peninsula Corporate Park

Ganpatrao Kadam Marg

Lower Parel

Mumbai – 400 013

Maharashtra

Tel: +91 22 2496 4455

69

International Legal Counsel to the Lead Managers

Sidley Austin LLP

Level 31

Six Battery Road

Singapore 049909

Telephone: +65 62303900

Registrar to the Issue


(formerly known as “Karvy Fintech Private Limited”)

Selenium, Tower B

Plot No- 31 and 32, Financial District

Nanakramguda, Serilingampally


Telangana, India

Telephone: +91 (40) 6716 2222

Toll free number: 18004258998/18003454001



Contact Person: M. Murali Krishna



Investors may contact the Registrar or our Company Secretary and Compliance Officer for any pre-Issue or post-

Issue related matter. All grievances relating to the ASBA process or R-WAP process may be addressed to the

Registrar, with a copy to the SCSBs (in case of ASBA process), giving full details such as name, address of the

Applicant, contact number(s), E-mail address of the sole/ first holder, folio number or demat account number,

number of Equity Shares applied for, amount blocked (in case of ASBA process) or amount debited (in case of

R-WAP process), ASBA Account number and the Designated Branch of the SCSBs where the Application Form

or the plain paper application, as the case may be, was submitted by the Investors along with a photocopy of the

acknowledgement slip (in case of ASBA process), and copy of the e-acknowledgement (in case of R-WAP

process).

For details on the ASBA process and R-WAP process, see “Terms of the Issue” on page 338.

Experts

Our Company has received a written consent dated July 20, 2020 from our Statutory Auditors, B S R & Co. LLP,

Chartered Accountants, to include their name in this Letter of Offer as an “expert”, as defined under applicable

laws, to the extent and in their capacity as a statutory auditor, and in respect of the reports issued by them, included

in this Letter of Offer. Such consent has not been withdrawn as on the date of this Letter of Offer. However, the

term “expert” shall not be construed to mean an “expert” as defined under the U.S. Securities Act.

Bankers to the Issue

Axis Bank Limited

167B, Ground Floor, Ready Money Terrace

Dr. A. B. Road, Worli Naka

Mumbai 400 018

Telephone: +91 (22) 6106 1123/24/1103

E-mail: [email protected]/[email protected]

Contact Person: Niraj Singh/Mehul Chinda

Website: www.axisbank.com


70

Bankers to our Company

Axis Bank Limited

167B, Ground Floor, Ready Money Terrace

Dr. A. B. Road, Worli Naka

Mumbai 400 018

Telephone: +91 (22) 6106 1123/24/1103

E-mail: [email protected]/[email protected]

Contact Person: Niraj Singh/Mehul Chinda


Kotak Mahindra Bank Limited

27 BKC 3rd Floor,

Plot No. C-27, G-Block,

Bandra Kurla Complex (BKC),

Bandra (E),

Mumbai- 400 051

Telephone: +91 (22) 6166 0363


Contact Person: Vikash Chandak

Website: www.kotak.com

Statutory Auditors of our Company

B S R & Co. LLP

Lodha Excelus, 5th Floor,

Apollo Mills Compound,

NM Joshi Marg, Mahalaxmi,

Mumbai 400 011, India

Telephone: +91 22 3989 6000

Email: [email protected]

ICAI Registration Number: 101248W/W-100022

Peer Review Certificate Number: 011748

Designated Intermediaries

Self-Certified Syndicate Banks

The list of banks that have been notified by SEBI to act as the SCSBs for the ASBA process is provided on the

website of SEBI at https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34 as

updated from time to time or at such other website as may be prescribed from time to time. Further, for a list of

branches of the SCSBs named by the respective SCSBs to receive the ASBA applications from the Designated

Intermediaries and updated from time to time, please refer to the above mentioned link or any such other website

as may be prescribed by SEBI from time to time.

Issue Schedule

ISSUE OPENING DATE Tuesday, July 28, 2020

LAST DATE FOR ON MARKET RENUNCIATION OF RIGHTS

ENTITLEMENT#*

Friday, August 7, 2020

LAST DATE FOR CREDIT OF RIGHTS ENTITLEMENTS Monday, August 10, 2020

ISSUE CLOSING DATE^ Tuesday, August 11, 2020

FINALISATION OF BASIS OF ALLOTMENT (ON OR ABOUT) Thursday, August 20, 2020

DATE OF ALLOTMENT (ON OR ABOUT) Friday, August 21, 2020

DATE OF CREDIT (ON OR ABOUT) Tuesday, August 25, 2020

DATE OF LISTING (ON OR ABOUT) Thursday, August 27, 2020

# Eligible Equity Shareholders are requested to ensure that renunciation through off-market transfer is completed in such a

manner that the Rights Entitlements are credited to the demat account of the Renouncees on or prior to the Issue Closing Date.

https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34

71

^Our Board or a duly authorized committee thereof will have the right to extend the Issue Period as it may determine from

time to time, provided that this Issue will not remain open in excess of 30 days from the Issue Opening Date (inclusive of the

Issue Opening Date). Further, no withdrawal of Application shall be permitted by any Applicant after the Issue Closing Date.

Please note that if Eligible Equity Shareholders holding Equity Shares in physical form as on Record Date, have

not provided the details of their demat accounts to our Company or to the Registrar, they are required to provide

their demat account details to our Company or the Registrar not later than two Working Days prior to the Issue

Closing Date, i.e., Friday, August 7, 2020, to enable the credit of the Rights Entitlements by way of transfer from

the demat suspense escrow account to their respective demat accounts, at least one day before the Issue Closing

Date, i.e., Monday, August 10, 2020.

Further, in accordance with the SEBI Rights Issue Circulars, (a) the Eligible Equity Shareholders, who hold Equity

Shares in physical form as on Record Date; or (b) the Eligible Equity Shareholders, who hold Equity Shares in

physical form as on Record Date and who have not furnished the details of their demat account to the Registrar

or our Company at least two Working Days prior to the Issue Closing Date, desirous of subscribing to Equity

Shares may also apply in this Issue during the Issue Period. For details, see “Terms of the Issue” on page 338.

Investors are advised to ensure that the Applications are submitted on or before the Issue Closing Date. Our

Company, the Lead Managers or the Registrar will not be liable for any loss on account of non-submission of

Applications on or before the Issue Closing Date. Further, it is also encouraged that the applications are submitted

well in advance before Issue Closing Date, due to prevailing COVID-19 related conditions. For details on

submitting Application, see “Terms of the Issue” on page 338.

The details of the Rights Entitlements with respect to each Eligible Equity Shareholders can be accessed by such

respective Eligible Equity Shareholders on the website of the Registrar at https://rights.kfintech.com/mahindra

after keying in their respective details along with other security control measures implemented thereat. For details,

see “Terms of the Issue” on page 338.

Credit Rating

As this Issue is of Equity Shares, there is no requirement of credit rating for this Issue.

Debenture Trustee

As this Issue is of Equity Shares, the appointment of a debenture trustee is not required.

Monitoring Agency

Our Company has appointed Axis Bank Limited as the monitoring agency, in accordance with Regulation 82 of

the SEBI ICDR Regulations, to monitor the utilisation of Net Proceeds. The details of the Monitoring Agency are

as follows:

Axis Bank Limited

The Ruby, 2nd Floor, SW

29, Senapati Bapat Marg,

Dadar West,

Mumbai – 400 028

Telephone: +91 9167006531


Contact Person: Mr. Niraj Singh


Inter-se allocation of responsibilities among the Lead Managers

The Lead Managers to the Issue shall be responsible for the following activities relating to co-ordination and other

activities in relation to the Issue:

S.

No. Activity Responsibility Coordination

1. Capital structuring with the relative components and formalities such

as type of instrument, number of instruments to be issued, etc.

All Lead

Managers

Kotak Mahindra Capital

Company Limited

https://secure-web.cisco.com/1VdLat2aJzVtCu3vy7Mnw_aelXrzCPIDgLRKre19Uh7qqrSar3tZw9TJ6QW6ZxlK-ucWD1qDgMHf5aqVJ_soC7suLjju4Q1gF4m1FAZfVAdaZMrw33YV90Y3QV5sJlOODZeLjynMSLgELOxQaaff1-Bp3Q8DlR4ZsVCUcA6FyDQeLT1dBcZFq_1J6X5TzSBb8NqcRgxplwEBuN5YthSFKCF5r4SnqNBQfbb8rG-oV-qz30Ln4rYJPfm2WD8UXEUfymRTcGfS-Nc3U-GLml9uA4EDTiePeDVJmPzJ17f-zdIq2CiI4Cn693VDPf-ioRHB1ekeZcFEFChfq0BWsmZUi_g/https%3A%2F%2Frights.kfintech.com

72

S.

No. Activity Responsibility Coordination

2. Coordination for drafting and design of the Letter of Offer, Abridged

Letter of Offer and Application Form as per the SEBI ICDR

Regulations, SEBI LODR Regulations and other stipulated

requirements and completion of filings with the Stock Exchanges

and SEBI.

All Lead

Managers


Company Limited

3. Drafting, design and distribution of the Rights Entitlement

Intimation.

All Lead

Managers


Company Limited

4. Selection of various agencies connected with the Issue, namely

Registrar to the Issue, Escrow Bank/ Banker(s) to the Issue,

Advertising Agency, Monitoring Agency and coordination of

execution of related agreements.

All Lead

Managers

BNP Paribas

5. Drafting and approval of all statutory advertisement. All Lead

Managers

SBI Capital Markets

Limited

6. Drafting and approval of all publicity material including corporate

advertisement, brochure, corporate films, etc. and coordination for

filing of media compliance report, if any.

All Lead

Managers

Citigroup Global

Markets India Private

Limited

7. Formulating and Coordination of International marketing strategy All Lead

Managers

HSBC Securities and

Capital Markets (India)

Private Limited

8. Formulating and Coordination of Domestic Institutional marketing

strategy

All Lead

Managers


Company Limited

9. Formulating retail strategy which will cover, inter alia, distribution

of publicity and Issue materials including application form, brochure

and Letter of Offer and coordination for queries related to retail

investors.

All Lead

Managers


10. Submission of 1% security deposit All Lead

Managers

HDFC Bank Limited

11. Co-ordination with stock exchanges and formalities for use of online

software, bidding terminal, mock trading, etc.

All Lead

Managers

Nomura Financial

Advisory and Securities

(India) Private Limited

12. Post-Issue activities, which shall involve essential follow-up steps

including follow-up with Escrow Bank/ Bankers to the Issue and the

SCSBs to get quick estimates of collection and advising our

Company about the closure of the Issue, finalization of the Basis of

Allotment, technical rejections or weeding out of multiple

applications, listing of instruments, dispatch of certificates or demat

credit and refunds and coordination with various agencies connected

with the post issue activity such as Registrar to the Issue, Escrow

Bank/ Bankers to the Issue, SCSBs, etc., release of 1% security

deposit

All Lead

Managers

ICICI Securities

Limited

Appraising Entity

None of the purposes for which the Net Proceeds are proposed to be utilised have been financially appraised by

any banks or financial institution or any other independent agency.

Minimum Subscription

Pursuant to SEBI Circular dated April 21, 2020, bearing reference no. SEBI/HO/CFD/CIR/CFD/DIL/ 67/2020

granting relaxations from certain provisions of the SEBI ICDR Regulations, if our Company does not receive the

minimum subscription of 75% of the Issue Size, our Company shall refund the entire subscription amount received

within 15 days from the Issue Closing Date.

However, if our Company receives subscription between 75% to 90%, of the Issue Size, at least 75% of the Issue

Size shall be utilized for the objects of this Issue (other than general corporate purpose) and the remaining Net

Proceeds shall be utilised towards general corporate purposes. For further details on utilisation of Net Proceeds,

see “Objects of the Issue” on page 84. If there is delay in the refund of the subscription amount beyond such

period as prescribed by applicable laws, our Company and Directors who are “officers in default” will pay interest

for the delayed period, as prescribed under applicable laws.

Our Promoter, pursuant to a letter dated July 18, 2020, has confirmed that it intends to (i) subscribe to the full

extent of its Rights Entitlements and (ii) subscribe to additional Equity Shares in the Issue and any undersubscribed

73

portion in the Issue, over and above its Rights Entitlements for ensuring full subscription in the Issue, subject to

compliance with applicable laws.

To the extent required by applicable law, any participation by the Promoter, over and above its Rights Entitlement,

shall not result in a breach of the minimum public shareholding requirements prescribed under applicable law.

As on the date of this Letter of Offer, members of our Promoter Group (other than our Promoter), do not hold any

Equity Shares in the Company.

Underwriting

This Issue is not underwritten.

Filing

This Letter of Offer is being filed with the Stock Exchanges as per the provisions of the SEBI ICDR Regulations.

Additionally, in compliance with the SEBI ICDR Regulations, our Company will simultaneously do an online

filing with SEBI, through the SEBI intermediary portal at https://siportal.sebi.gov.in in terms of the circular (No.

SEBI/HO/CFD/DIL1/CIR/P/2018/011) dated January 19, 2018 issued by SEBI. Further, on account of SEBI

notification dated March 27, 2020, our Company will submit a copy of this Letter of Offer to the following e-mail

address: [email protected].

74

CAPITAL STRUCTURE

The share capital of our Company as on the date of this Letter of Offer is as provided below:

(in ₹, except share data)

Aggregate value at face

value

Aggregate value

at Issue Price

1 AUTHORISED SHARE CAPITAL

2,500,000,000 Equity Shares 5,000,000,000 Not applicable

5,000,000 redeemable preference shares of ₹100 each 500,000,000 Not applicable

2 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL BEFORE

THIS ISSUE

617,764,960 Equity Shares 1,235,529,920 Not applicable

3 PRESENT ISSUE IN TERMS OF THIS LETTER OF OFFER(1)

617,764,960 Equity Shares 1,235,529,920 30,888,248,000

4 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL AFTER

THIS ISSUE(2)

1,235,529,920 Equity Shares 2,471,059,840 Not applicable

5 SECURITIES PREMIUM ACCOUNT

Before the Issue 41,784,717,110

After the Issue(3) 71,437,435,190

(1) This Issue has been authorised by a resolution passed by our Board at its meeting held on June 1, 2020, pursuant to Section 62(1)(a)

and other applicable provisions of the Companies Act, 2013. The Issue Size has been approved by a resolution passed by our Board at its meeting held on July 18, 2020.

(2) Assuming full subscription for and Allotment of the Rights Entitlement. (3) Subject to finalisation of Basis of Allotment, Allotment and deduction of Issue expenses.

75

Notes to the Capital Structure

1. Shareholding pattern of our Company as per the last quarterly filing with the Stock Exchanges in compliance with the provisions of the SEBI Listing

Regulations:

(i) The shareholding pattern of our Company as on June 30, 2020, is as follows:

Categ

ory (I)

Category of

shareholder

(II)

Nos. of

sharehol

ders (III)

No. of fully

paid up equity

shares held

(IV)

Total nos.

shares held

(V)

Shareholding

as a % of

total no. of

shares

(calculated as

per SCRR,

1957) (VI) As

a % of

(A+B+C2)

Number of Voting Rights held in each class

of securities (VII)

Shareholdin

g , as a %

assuming full

conversion of

convertible

securities (as

a percentage

of diluted

share

capital) (VI)

As a % of

(A+B+C2)

Number of Locked in

shares(VIII)

(a)Number of

equity shares

held in

dematerialized

form (IX)

Number of Voting Rights

Total as a

% of

(A+B+C)

No (a)

As a %

of total

Shares

held (b)

Class X

(Equity) Total

(A) Promoter &

Promoter Group

1 316,207,660 316,207,660 51.19 316,207,660 316,207,660 51.19 51.19 25,000,000 7.91 316,207,660

(B) Public 136,290 299,430,034 299,430,034 48.47 299,430,034 299,430,034 48.47 48.47 - 0 299,188,159

(C) Non Promoter-

Non Public

1 2,127,266 2,127,266 - 2,127,266 2,127,266 0.34 - - 0 2,127,266

(C1) Shares

underlying DRs

0 0 0 - 0 0 0 - - 0 0

(C2)

Shares held by

Employee

Trusts

1 2,127,266 2,127,266 0.34 2,127,266 2,127,266 0.34 0.34 - 0 2,127,266

Total 136,292 617,764,960 617,764,960 100.00 617,764,960 617,764,960 100.00 100.00 25,000,000 4.05 617,523,085

Note:

1. Shareholding as a % of total no. of shares (calculated as per SCRR, 1957) (Column VI) is calculated as % of (A+B+C2)).

2. Number of Voting Rights (Total as a % of Total Voting rights) (Column VII) is calculated as % of Total Share Capital (A+B+C)).

3. Number of Locked in shares (As a % of total Shares held) (Column VIII) is calculated as % of Total shares held.

(Kindly note that this formula is applicable w.e.f. Apr 1, 2016; previously it was calculated as % of Total Share Capital (A+B+C)).

4. Number of Shares pledged or otherwise encumbered (As a % of total Shares held) (Column VIII) is calculated as % of Total nos. shares held.

76

(ii) Statement showing shareholding pattern of the Promoter and Promoter Group as on June 30, 2020 is as follows:

(A)

Category & Name

of the

shareholders (I)

Nos. of

shareholder

(II)

No. of fully

paid up equity

shares held

(III)

Total nos.

shares held (IV)

Shareholding

as a % of

total no. of

shares

(calculated as

per SCRR,

1957) (V) As a

% of

(A+B+C2)

Number of Voting Rights held in each

class of securities (VI)

Shareholding

, as a %

assuming full

conversion of

convertible

securities (as

a percentage

of diluted

share

capital) (V)

As a % of

(A+B+C2)

Number of Locked in

shares(VII)

(a)Number of

equity shares

held in

dematerialized

form (VIII) Number of Voting Rights

Total as a

% of

Total

Voting

rights

No.(a)

As a %

of total

Shares

held (b)

Class X

(Equity) Total

(1) Indian 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(a) Individuals/Hindu

undivided Family 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(b) Central

Government/ State

Government(s)

0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(c) Financial

Institutions/ Banks 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(d) Any Other (specify) 1 316,207,660 316,207,660 51.19 316,207,660 316,207,660 51.19 51.19 25,000,000 7.91 316,207,660

i) Bodies

Corporate 1 316,207,660 316,207,660 51.19 316,207,660 316,207,660 51.19 51.19 25,000,000 7.91 316,207,660

MAHINDRA &

MAHINDRA

LIMITED

1 316,207,660 316,207,660 51.19 316,207,660 316,207,660 51.19 51.19 25,000,000 7.91 316,207,660

Sub-Total (A)(1) 1 316,207,660 316,207,660 51.19 316,207,660 316,207,660 51.19 51.19 25,000,000 7.91 316,207,660

(2) Foreign 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(a) Individuals (Non-

Resident

Individuals/Foreign

Individuals)

0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(b) Government 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(c) Institutions 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

77

(A)

Category & Name

of the

shareholders (I)

Nos. of

shareholder

(II)

No. of fully

paid up equity

shares held

(III)

Total nos.

shares held (IV)

Shareholding

as a % of

total no. of

shares

(calculated as

per SCRR,

1957) (V) As a

% of

(A+B+C2)

Number of Voting Rights held in each

class of securities (VI)

Shareholding

, as a %

assuming full

conversion of

convertible

securities (as

a percentage

of diluted

share

capital) (V)

As a % of

(A+B+C2)

Number of Locked in

shares(VII)

(a)Number of

equity shares

held in

dematerialized

form (VIII) Number of Voting Rights

Total as a

% of

Total

Voting

rights

No.(a)

As a %

of total

Shares

held (b)

Class X

(Equity) Total

(d) Foreign Portfolio

Investor 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

(e) Any Other (specify)

0 0 0.00 0 0 0.00 0.00 0 0.00 0

Sub-Total (A)(2) 0 0 0 0.00 0 0 0.00 0.00 0 0.00 0

Total

Shareholding of

Promoter and

Promoter Group

(A)= (A)(1)+(A)(2)

1 316,207,660 316,207,660 51.19 316,207,660 316,207,660 51.19 51.19 25,000,000 7.91 316,207,660

78

(iii) Statement showing shareholding pattern of the public shareholders of our Company as on June 30, 2020 is as follows:

(B) Category & Name of the

shareholders (I)

Nos. of

shareholder

(II)

No. of fully

paid up equity

shares held

(III)

Total nos.

shares held

(IV)

Shareholding %

calculated as per

SCRR, 1957 As a

% of (A+B+C2) (V)

Number of Voting Rights held in each class of

securities (VI)

Shareholding, as a

% assuming full

conversion of

convertible

securities (as a

percentage of

diluted share

capital) (V) as a %

of (A+B+C2)

Number of

equity shares

held in

dematerialized

form (VII)


Total as a

% of

Total

Voting

rights

Class X(Equity) Total

(1) Institutions 0 0 0 0.00 0 0 0.00 0.00 0

(a) Mutual Funds 20 57,830,281 57,830,281 9.36 57,830,281 57,830,281 9.36 9.36 57,830,281

ICICI Mutual Fund 1 12,332,723 12,332,723 2.00 12,332,723 12,332,723 2.00 2.00 12,332,723

Kotak Mutual Fund 1 6,472,376 6,472,376 1.05 6,472,376 6,472,376 1.05 1.05 6,472,376

SBI Mutual Fund 1 11,829,731 11,829,731 1.91 11,829,731 11,829,731 1.91 1.91 11,829,731

Axis Mutual Fund 1 7,594,310 7,594,310 1.23 7,594,310 7,594,310 1.23 1.23 7,594,310

(b) Venture Capital Funds 0 0 0 0.00 0 0 0.00 0.00 0

(c)

Alternate Investment

Funds 8 2,441,862 2,441,862 0.40 2,441,862 2,441,862 0.40 0.40 2,441,862

(d)

Foreign Venture Capital

Investors 0 0 0 0.00 0 0 0.00 0.00 0

(e)

Foreign Portfolio

Investors 224 145,296,298 145,296,298 23.52 145,296,298 145,296,298 23.52 23.52 145,296,298

Valiant Mauritius

Partners Offshore

Limited 1 11,897,492 11,897,492 1.93 11,897,492 11,897,492 1.93 1.93 11,897,492

Wishbone Fund, Ltd. 1 9,000,000 9,000,000 1.46 9,000,000 9,000,000 1.46 1.46 9,000,000

Buena Vista Asian

Opportunities Master

Fund Ltd 1 8,600,000 8,600,000 1.39 8,600,000 8,600,000 1.39 1.39 8,600,000

Kotak Funds - India

Midcap Fund 1 6,456,954 6,456,954 1.05 6,456,954 6,456,954 1.05 1.05 6,456,954

(f)

Financial

Institutions/Banks 2 18,227,300 18,227,300 2.95 18,227,300 18,227,300 2.95 2.95 18,227,300

Life Insurance

Corporation of India 1 17,837,196 17,837,196 2.89 17,837,196 17,837,196 2.89 2.89 17,837,196

(g) Insurance Companies 0 0 0 0.00 0 0 0.00 0.00 0

(h)

Provident Funds/Pension

Funds 0 0 0 0.00 0 0 0.00 0.00 0

(i) Any Other (specify) 10 2,416,788 2,416,788 0.39 2,416,788 2,416,788 0.39 0.39 2,416,788

79


shareholders (I)

Nos. of

shareholder

(II)

No. of fully

paid up equity

shares held

(III)

Total nos.

shares held

(IV)

Shareholding %

calculated as per

SCRR, 1957 As a

% of (A+B+C2) (V)


securities (VI)

Shareholding, as a

% assuming full

conversion of

convertible

securities (as a

percentage of

diluted share

capital) (V) as a %

of (A+B+C2)

Number of

equity shares

held in

dematerialized

form (VII)


Total as a

% of

Total

Voting

rights


Qualified Institutional

Buyer 10 2,416,788 2,416,788 0.39 2,416,788 2,416,788 0.39 0.39 2,416,788

Sub Total (B)(1) 264 226,212,529 226,212,529 36.62 226,212,529 226,212,529 36.62 36.62 226,212,529

(2)

Central

Government/State

Government(s)/Preside

nt of India 0 0 0 0.00 0 0 0.00 0.00 0

Sub Total (B)(2) 0 0 0 0.00 0 0 0.00 0.00 0

(3) Non-Institutions 0 0 0 0.00 0 0 0.00 0.00 0

(a)

i) Individual shareholders

holding nominal share

capital up to Rs.2 lakhs 132,034 30,807,647 30,807,647 4.99 30,807,647 30,807,647 4.99 4.99 30,664,727

ii) Individual

shareholders holding

nominal share capital in

excess of Rs. 2 Lakhs 15 4,785,499 4,785,499 0.77 4,785,499 4,785,499 0.77 0.77 4,785,499

(b)

NBFCs Registered with

RBI 4 14,090 14,090 0.00 14,090 14,090 0.00 0.00 14,090

(c) Employee Trusts 0 0 0 0.00 0 0 0.00 0.00 0

(d)

Overseas Depositories

(Holding

DRs)(Balancing figure) 0 0 0 0.00 0 0 0.00 0.00 0

(e) Any Other (specify) 3,973 37,610,269 37,610,269 6.09 37,610,269 37,610,269 6.09 6.09 37511314

Bodies Corporate 673 29,756,727 29,756,727 4.82 29,756,727 29,756,727 4.82 4.82 29,657,772

HDFC Life Insurance

Company Limited 1 13,640,901 13,640,901 2.21 13,640,901 13,640,901 2.21 2.21 13,640,901

Clearing Members 302 5,034,879 5,034,879 0.82 5,034,879 5,034,879 0.82 0.82 5,034,879

Investor Education and

Protection Fund (IEPF)

Authority 1 67,557 67,557 0.01 67,557 67,557 0.01 0.01 67,557

Non Resident Indians

(NRI) 2,991 1,285,794 1,285,794 0.21 1,285,794 1,285,794 0.21 0.21 1,285,794

Trusts 6 1,465,312 1,465,312 0.24 1,465,312 1,465,312 0.24 0.24 1,465,312

80


shareholders (I)

Nos. of

shareholder

(II)

No. of fully

paid up equity

shares held

(III)

Total nos.

shares held

(IV)

Shareholding %

calculated as per

SCRR, 1957 As a

% of (A+B+C2) (V)


securities (VI)

Shareholding, as a

% assuming full

conversion of

convertible

securities (as a

percentage of

diluted share

capital) (V) as a %

of (A+B+C2)

Number of

equity shares

held in

dematerialized

form (VII)


Total as a

% of

Total

Voting

rights


Sub Total (B)(3) 136,026 73,217,505 73,217,505 11.85 73,217,505 73,217,505 11.85 11.85 72,975,630

Total Public

Shareholding (B) =

(B)(1)+(B)(2)+(B)(3) 136,290 299,430,034 299,430,034 48.47 299,430,034 299,430,034 48.47 48.47 299,188,159

81

(iv) Statement showing shareholding pattern of the non-Promoter and non-public shareholder of our Company as on June 30, 2020 is as follows:

(C) Category & Name of

the shareholders (I)

Nos. of

shareholder

(II)

No. of fully

paid up

equity shares

held (III)

Total nos.

shares held

(IV)

Shareholding %

calculated as per

SCRR, 1957 As

a % of

(A+B+C2) (V)

Number of Voting Rights held in each class

of securities (VI)

Shareholding, as a

% assuming full

conversion of

convertible

securities (as a

percentage of

diluted share

capital) (V) as a %

of (A+B+C2)

Number of equity

shares held in

dematerialized

form (VII)


Total as a %

of Total

Voting rights Class X

(Equity) Total

(1) Custodian/DR

Holder

0 0 0 0.00 0 0 0.00 0.00 0

(2) Employee Benefit

Trust (under SEBI

(Share based

Employee Benefit)

Regulations, 2014)

1 2,127,266 2,127,266 0.34 2,127,266 2,127,266 0.34 0.34 2,127,266

Total Non-

Promoter- Non

Public Shareholding

(C)= (C)(1)+(C)(2)

1 2,127,266 2,127,266 0.34 2,127,266 2,127,266 0.34 0.34 2,127,266

82

2. No Equity Shares have been acquired by our Promoter or Promoter Group in the last one year

immediately preceding the date of this Letter of Offer.

3. Except for 25,000,000 Equity Shares held by our Promoter, Mahindra & Mahindra Limited, representing

7.91% of its shareholding in the Company and 4.05% of the pre-Issue equity share capital of our

Company, none of the Equity Shares held by our Promoter or Promoter Group have been locked-in,

pledged or encumbered as of the date of this Letter of Offer.

4. Except for Equity Shares that may be allotted pursuant to the ESOS-2010, there are no outstanding

options or convertible securities, including any outstanding warrants or rights to convert debentures,

loans or other instruments convertible into our Equity Shares as on the date of this Letter of Offer.

Employees Stock Option Scheme - 2010

Our Company has formulated an employee stock option scheme titled ESOS-2010. The ESOS-2010 has

been authorized pursuant to, a resolution of the Board dated July 23, 2010 and a resolution passed by

shareholders of our Company through postal ballot dated September 18, 2010. The ESOS-2010 is

operated and administered by the Nomination and Remuneration Committee through the ESOS Trust to

grant options to eligible employees.

As on date, the ESOS Trust 2010 holds 2,063,662 Equity Shares.

The objective of ESOS-2010 is to use the scheme as a business strategy to enhance our Company’s

profitability by providing equity linked incentive to employees, so that the employees keep exploring

possibilities of increasing the revenue, saving costs and enhancing the profits our Company. Upon

exercise of an option by an eligible employee, Equity Shares of our Company held by the relevant

employees stock option trust is transferred to the relevant employee.

As on the date of this Letter of Offer, the details of options pursuant to the ESOS-2010 are as follows:

Particulars Number of options (ESOS-2010)*

Total number of options authorized for issuance 5,788,640

Total number of options granted 5,720,786

Total number of options vested 3,715,288

Total number of options exercised 3,566,638

Total number of options cancelled / lapsed / forfeited 158,340

Total number of options outstanding 1,995,808 *Pursuant to resolution of the Board of Directors in their meeting held on March 27, 2019, 785,275 stock options, being the

balance number of options available in the ESOS-2005, were transferred to the ESOS-2010 on March 14, 2019. Accordingly, the ESOS - 2005 stands closed, effective from the date of the said transfer.

5. Subscription to the Issue by our Promoter and Promoter Group

Our Promoter, pursuant to a letter dated July 18, 2020, has confirmed that it intends to (i) subscribe to

the full extent of its Rights Entitlements and (ii) subscribe to additional Equity Shares in the Issue and

any undersubscribed portion in the Issue, over and above its Rights Entitlements for ensuring full

subscription in the Issue, subject to compliance with applicable laws.

To the extent required by applicable law, any participation by the Promoter, over and above its Rights

Entitlement, shall not result in a breach of the minimum public shareholding requirements prescribed

under applicable law.

As on the date of this Letter of Offer, members of our Promoter Group (other than our Promoter), do not

hold any Equity Shares in the Company.

6. The ex-rights price of the Equity Shares, as computed in accordance with Regulation 10(4)(b) of the

SEBI Takeover Regulations, is ₹ 108.96 per Equity Share.

83

7. All Equity Shares are fully paid-up and there are no partly paid-up Equity Shares outstanding as on the

date of this Letter of Offer. The Equity Shares Allotted pursuant to the Issue shall be fully paid-up. For

details on the terms of this Issue, see “Terms of the Issue” on page 338.

8. At any given time, there shall be only one denomination of the Equity Shares.

9. Details of the Shareholders holding more than 1% of the issued and paid-up Equity Share capital

The table below sets forth details of Shareholders holding more than 1% of the issued and paid-up Equity

Share capital of our Company, as on July 17, 2020:

Sr. No Name of Shareholder

Number of

Equity Shares

held

Percentage of

Equity Shares

held (%)

1 Mahindra & Mahindra Limited 316,207,660 51.19

2 HDFC Life Insurance Company Limited 13,329,542 2.16

3 Valiant Mauritius Partners Offshore Limited 11,897,492 1.93

4 Life Insurance Corporation of India 11,746,184 1.90

5 Wishbone Fund Limited 9,000,000 1.46

6 Buena Vista Asian Opportunities Master Fund Limited 8,600,000 1.39

7 Kotak Funds - India Midcap Fund 6,456,954 1.05

Total 377,237,832 61.06

84

OBJECTS OF THE ISSUE

Our Company intends to utilize the Net Proceeds from this Issue, towards the following objects:

1. Repayment/ prepayment of certain outstanding borrowings availed by our Company;

2. Augmenting the long-term capital and resources for meeting funding requirements for our Company’s

business activities; and

3. General corporate purposes.

(collectively, referred to herein as the “Objects of the Issue”)

The main objects and objects incidental and ancillary to the main objects set out in the Memorandum of

Association enable our Company to undertake (i) our existing activities; (ii) the activities for which the funds are

being raised by our Company through this Issue; (iii) the activities for which the borrowings were availed and

which are proposed to be prepaid or repaid from the Net Proceeds; and (iv) to undertake activities for which

funds earmarked towards general corporate purposes shall be used.

Issue Proceeds

The details of the Issue Proceeds are set forth in the table below: (in ₹ millions)

Particulars Amount#

Gross Proceeds from this Issue* 30,888.25

Less: Estimated Issue related expenses 97.50

Net Proceeds 30,790.75 *Assuming full subscription and Allotment of the Equity Shares. # Rounded off to two decimal places.

Requirement of funds and utilisation of Net Proceeds

The proposed utilization of the Net Proceeds by our Company is set forth in the table below:

(in ₹ millions)

Particulars Amount#

Repayment/ prepayment of certain outstanding borrowings availed by our Company 16,000.00

Augmenting the long-term capital and resources for meeting funding requirements for our

Company’s business activities

8,000.00

General corporate purposes* 6,790.75

Total Net Proceeds** 30,790.75 * Subject to the finalization of the Basis of Allotment and the Allotment of the Equity Shares. The amount utilized for general corporate

purposes shall not exceed 25% of the Net Proceeds. However, if our Company receives subscription between 75% to 90%, of the Issue

Size, at least 75% of the Issue Size shall be utilized for the objects of this Issue (other than general corporate purposes) and the

remaining Net Proceeds shall be utilised towards general corporate purposes. ** Assuming full subscription and Allotment of the Equity Shares. #Rounded off to two decimal places.

There are no existing or anticipated transactions in relation to utilization of Net Proceeds with our Promoter,

Promoter Group, Directors, key managerial personnel as identified by our Company or our Group Companies.

Means of Finance

The funding requirements mentioned above and the estimated deployment schedule mentioned below, are based

on our Company’s internal management estimates and have not been appraised by any bank, financial institution

or any other external agency. They are based on current circumstances of our business and our Company may

have to revise these estimates from time to time on account of various factors beyond our control, such as market

conditions, competitive environment, or interest rate fluctuations. We intend to finance the Objects of the Issue

from the Net Proceeds. Accordingly, our Company is not required to make firm arrangements of finance through

85

verifiable means towards at least 75% of the stated means of finance, excluding the amount to be raised through

the Issue.

Further, our Company’s funding requirements and deployment schedules for the reduction of outstanding

borrowings as stated hereinabove, are subject to revision in the future at the discretion of our management. If

additional funds are required for the purposes mentioned above, such requirement may be met through various

options including through internal accruals of our Company.

Details of the Objects of the Issue

The details in relation to Objects of the Issue are set forth herein below.

1. Repayment/ prepayment of certain outstanding borrowings availed by our Company.

Our Company has entered into various financing arrangements including borrowings in the form of term

loans, external commercial borrowings, working capital loans, debentures, bonds and commercial papers,

among others. These arrangements include a mix of secured and unsecured loans.

Our Company proposes to utilize an aggregate amount of ₹16,000.00 millions (rounded off to two decimal

places) from the Net Proceeds towards full or partial repayment/ prepayment of certain borrowings (principal

and/or accrued interest) availed by our Company.

The selection of borrowings proposed to be prepaid or repaid out of the borrowings provided above, shall be

based on various factors including (i) any conditions attached to the borrowings restricting our ability to

prepay the borrowings and time taken to fulfil such requirements; (ii) receipt of consents for prepayment or

waiver from any conditions attached to such prepayment from our respective lenders; (iii) terms and

conditions of such consents and waivers; (iv) levy of any prepayment penalties and the quantum thereof, (v)

provisions of any law, rules, regulations governing such borrowings, and (vi) other commercial considerations

including, among others, the interest rate on the borrowings, the amount of the outstanding borrowings,

maturity period and the remaining tenor of the borrowing. Payment of interest, prepayment penalty or

premium, if any, and other related costs shall be made by us out of the Net Proceeds.

The repayment/ prepayment of loans by utilizing the Net Proceeds will help reduce our outstanding

indebtedness, debt-servicing costs and improve our debt to equity ratio. In addition, we believe that the

improved debt to equity ratio will enable us to raise further resources in the future to fund potential business

development opportunities and plans to grow and expand our business in the future.

Our Company proposes to repay / prepay either fully or partly any of the following borrowings or a

combination thereof, subject to terms and conditions stated above:

Sr. No. Name of the

lender/ISIN*

Nature of

borrowing

Date of Maturity/

Next instalment

Principal amount

due to be paid on

Maturity/ Next

instalment date

(in ₹ millions)

Purpose of

borrowing**

1. HDFC Bank

Limited

Term loan August 28, 2020 416.67 Financing of assets

2. Federal Bank

Limited

Term loan August 29, 2020 333.33 Onward lending

3. Karnataka Bank

Limited


4. State Bank of

India


5. State Bank of

India


6. Axis Bank

Limited

Term loan August 31, 2020 3,000.00 Onward lending

7. HDFC Bank

Limited

Term loan August 31, 2020 300.00 Refinance of loan

portfolio

8. HDFC Bank

Limited


86

Sr. No. Name of the

lender/ISIN*

Nature of

borrowing

Date of Maturity/

Next instalment

Principal amount

due to be paid on

Maturity/ Next

instalment date

(in ₹ millions)

Purpose of

borrowing**

9. HSBC Bank

Limited

Term loan September 25,

2020

2,500.00 Onward lending

10. Axis Bank

Limited


2020

1,250.00 Working capital

requirements

11. HDFC Bank

Limited


2020

541.67 Onward lending

12. HDFC Bank

Limited


2020


13. HSBC Bank

Limited


2020

2,000.00 Financing of assets

14. HDFC Bank

Limited


2020

416.67 Working capital

requirements

15. Bank of India

Limited


2020

1,500.00 Augmenting resources

of onward lending

16. HDFC Bank

Limited


2020


17. INE774D14QR9 Commercial

paper

August 20, 2020 5,000.00 Onward lending/

financing, refinancing

the existing

indebtedness of the

Company, operating

expenses and for

working capital

18. INE774D14QT5 Commercial

paper

September 4, 2020 3,000.00 Onward lending/

financing, refinancing

the existing

indebtedness of the

Company, operating

expenses and for

working capital.

19. INE774D07RQ3 NCD September 4, 2020 3,500.00 For long term working

capital.

20. INE774D07SO6 NCD September 14,

2020

1,073.00 Financing, repayment of

dues and long term

working capital

21. INE774D07RT7 NCD October 16, 2020 2,500.00 Long term working

capital

22. INE774D07NT6 NCD October 30, 2020 2,500.00 Long term working

capital

Total 32,281.33 *Certain Lead Managers, namely Axis Capital Limited, HDFC Bank Limited, HSBC Securities and Capital Markets (India) Private

Limited, and SBI Capital Markets Limited and, are affiliates of certain lenders identified in the table above, namely Axis Bank Limited,

HDFC Bank Limited, HSBC Bank Limited, and State Bank of India, respectively. However, on account of this relationship, neither of Axis Capital Limited, HDFC Bank Limited, HSBC Securities and Capital Markets (India) Private Limited or SBI Capital Markets

Limited or qualify as an “associate” of our Company in terms of Regulations 21(A)(1) of the Securities and Exchange Board of India

(Merchant Bankers) Regulations, 1992 and Regulation 69(3) of the SEBI ICDR Regulations. For details, see “Risk Factors- A portion of the Net Proceeds may be utilized for repayment or pre-payment of loans taken from certain lenders of our Company, which are

affiliates of certain Lead Managers” on page 38. **B.K Khare & Co., Chartered Accountants, pursuant to their certificate dated July 20, 2020 have confirmed that these borrowings have been utilised for the purposes for which they were availed, as provided in the relevant borrowing documents.

In addition to the above, we may, from time to time, enter into further financing arrangements and draw down

funds thereunder. In such cases or in case any of the above borrowings are prepaid or repaid, refinanced or

further drawn-down prior to the completion of the Issue or utilisation of the Net Proceeds for such repayment

or prepayment, we may utilise the Net Proceeds of the Issue towards prepayment or repayment of such

additional indebtedness availed by us. However, the quantum of the Net Proceeds that will be utilized for

prepayment or repayment of the borrowings (principal and/or accrued interest) shall not exceed `16,000.00

millions.

2. Augment the long-term capital and resources for meeting funding requirements for our Company’s

business activities.

87

We are a non-banking financial company registered with RBI and a notified financial institution under the

SARFAESI Act. As per the capital adequacy norms issued by RBI, we are required to maintain a minimum

capital adequacy ratio, consisting of Tier I capital and Tier II capital. The total of Tier II Capital at any point

of time, cannot exceed 100% of Tier I Capital. The minimum capital ratio as prescribed by RBI guidelines

and applicable to our Company, consisting of Tier I and Tier II capital, cannot be less than 15% with Tier I

not being below 10% of our aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-

balance sheet. As on June 30, 2020, our Tier I capital adequacy ratio stood at 15.3% and Tier II capital

adequacy ratio stood at 4.3%, respectively.

Accordingly, we intend to utilise ₹8,000.00 millions (rounded off to two decimal places) from the Net

Proceeds towards to augment our capital base to meet our future capital requirements, which are expected to

arise out of growth of our business and assets, including towards onwards lending as part of our business

activities and to ensure compliance with applicable regulatory requirements.

3. General corporate purposes

Our Company intends to deploy the balance Net Proceeds towards general corporate purposes (including if

the actual utilisation towards any of the objects is lower than the proposed deployment), subject to such

utilization not exceeding 25% of the Net Proceeds, in compliance with applicable laws, to drive our business

growth, including, amongst other things, (i) funding growth opportunities, including strategic initiatives; (ii)

working capital requirements; (iii) acquiring assets, furniture and fixtures, and intangibles; (iv) repayment/

prepayment of borrowings; (v) servicing of borrowings including payment of interest; (vi) meeting of

exigencies which our Company may face in the course of any business; (vii) brand building and other

marketing expenses; (viii) maintain deposits with scheduled commercial banks, in accordance with applicable

laws; and (ix) any other purpose as permitted by applicable laws. However, if our Company receives

subscription between 75% to 90%, of the Issue Size, at least 75% of the Issue Size shall be utilized for the

objects of this Issue other than for general corporate purposes and the remaining Net Proceeds, shall be

utilised towards general corporate purposes.

Our management will have the discretion to revise our business plan from time to time and consequently our

funding requirement and deployment of funds may change. This may also include rescheduling the proposed

utilization of Net Proceeds. Our management, in accordance with the policies of our Board, will have

flexibility in utilizing the proceeds earmarked for general corporate purposes. In the event that we are unable

to utilize the entire amount that we have currently estimated for use out of Net Proceeds in a Fiscal, we will

utilize such unutilized amount in the subsequent Fiscals.

Deployment of funds

The following table provides for the proposed deployment of funds, after deducting Issue related expenses.

(In ₹ millions)

Particulars

Amount

proposed to be

funded from Net

Proceeds#

Proposed schedule for deployment of the

Net Proceeds#

Fiscal 2021

Repayment/ prepayment of certain outstanding

borrowings availed by our Company

16,000.00 16,000.00

Augmenting the long-term capital and resources for

meeting funding requirements for our Company’s

business activities

8,000.00 8,000.00

General corporate purposes* 6,790.75 6,790.75

Total 30,790.75 30,790.75 * Subject to the finalization of the Basis of Allotment and the Allotment of the Equity Shares. The amount utilized for general corporate

purposes shall not exceed 25% of the Net Proceeds. # Rounded off to two decimal places.

In the event of any shortfall of funds for the activities proposed to be financed out of the Net Proceeds as stated

above, our Company may re-allocate the Net Proceeds to the activities where such shortfall has arisen, subject to

availability of funds and compliance with applicable laws. Our Company may also utilise any portion of the Net

88

Proceeds, towards the aforementioned objects of the Issue, ahead of the estimated schedule of deployment

specified above.

Estimated Issue Related Expenses

The total expenses of this Issue are estimated to be ₹ 97.50 million. The break-up of the Issue expenses is as

follows: (unless otherwise specified, in ₹ millions)

Sr. No. Particulars Amount Percentage of total estimated

Issue expenditure

Percentage of

Issue Size (%)

1. Fee of the Lead Managers 27.00 27.70% 0.09%

2. Fee of the Registrar to the Issue 2.00 2.10% 0.01%

3. Fee to the legal advisors, other professional

service providers and statutory fee 20.00 20.50% 0.06%

4. Advertising, marketing expenses,

shareholder outreach, etc. 8.00 8.20% 0.03%

5. Fees payable to regulators, depositories and

Stock Exchanges 30.00 30.80% 0.10%

6. Other expenses (including miscellaneous

expenses and stamp duty) 10.50 10.80% 0.03%

Total estimated Issue related expenses* 97.50 100.00 0.32%

* Subject to finalisation of Basis of Allotment. In case of any difference between the estimated Issue related expenses and actual expenses

incurred, the shortfall or excess shall be adjusted with the amount allocated towards general corporate purposes.

Bridge Financing Facilities

Our Company has not availed any bridge loans from any banks or financial institutions as on the date of this Letter

of Offer, which are proposed to be repaid from the Net Proceeds.

Interim Use of Net Proceeds

Our Company, in accordance with the policies formulated by our Board from time to time, will have flexibility to

deploy the Net Proceeds. Pending utilization of the Net Proceeds for the purposes described above, our Company

intends and will deposit the Net Proceeds only with scheduled commercial banks included in the second schedule

of the Reserve Bank of India Act, 1934, as may be approved by our Board.

Monitoring utilization of funds from the Issue

Our Company has appointed Axis Bank Limited as the Monitoring Agency for this Issue. Our Board and the

Monitoring Agency will monitor the utilization of Net Proceeds and the Monitoring Agency will submit its report

to our Board in terms of Regulation 82 of the SEBI ICDR Regulations. Our Company will disclose the utilization

of the Net Proceeds under a separate head along with details in our balance sheet(s) along with relevant details for

all the amounts that have not been utilized and will indicate instances, if any, of unutilized Net Proceeds in our

balance sheet for the relevant Fiscals post receipt of listing and trading approvals from the Stock Exchanges.

Pursuant to Regulation 82(4) of the SEBI ICDR Regulations and Regulation 32 of the SEBI Listing Regulations,

our Company shall, within 45 days from the end of each quarter, publicly disseminate the report of the Monitoring

Agency on our website as well as submit the same to the Stock Exchanges, including the statement indicating

deviations, if any, in the use of proceeds from the Objects of the Issue stated above. Such statement of deviation

shall be placed before our Audit Committee for review before its submission to Stock Exchanges. The Monitoring

Agency shall submit its report to our Company, on a quarterly basis, until at least 95% of the proceeds of this

Issue, excluding the proceeds raised for general corporate purposes, have been utilized.

Pursuant to Regulation 32 of the SEBI Listing Regulations, our Company shall, on an annual basis, prepare a

statement of funds utilised for purposes other than those stated above and place it before our Audit Committee,

until such time the full money raised through this Issue has been fully utilized. The statement shall be certified by

the Statutory Auditors of our Company. Our Audit Committee shall review the report submitted by the Monitoring

Agency and make recommendations to our Board for further action, if appropriate.

Appraising entity

89

None of the Objects of the Issue, for which the Net Proceeds will be utilized, require appraisal from any agency,

in accordance with applicable law.

Strategic or Financial Partners

There are no strategic or financial partners to the Objects of the Issue.

Interest of Promoter, Promoter Group and Directors, as applicable to the Objects of the Issue No part of the Issue proceeds will be paid by our Company to our Promoter, our Promoter Group or our Directors.

90

STATEMENT OF SPECIAL TAX BENEFITS

The Board of Directors

Mahindra & Mahindra Financial Services Limited

Mahindra Towers, 4th Floor,

Dr. GM Bhosale Marg, Worli

Mumbai – 400 018.

20 July 2020

Dear Sirs

Statement of possible special Tax Benefits available to Mahindra & Mahindra Financial Services Limited

(‘the Company’) and it’s shareholders and it’s material subsidiary, Mahindra Rural Housing Finance

Limited (‘MRHFL’) in connection with the proposed rights issue of equity shares of face value of Rs. 2 each

(the ‘Issue’)

1. This statement is issued in accordance with the terms of our agreement dated 20 July 2020.

2. We hereby confirm that the enclosed Annexure prepared by the Company, states the possible special tax

benefits available to the Company and its shareholders, and MRHFL under the Income tax Act, 1961

(the “Act”), presently in force in India.

3. Several of these benefits are dependent on the Company or its shareholders, or MRHFL fulfilling the

conditions prescribed under the relevant statutory provisions of the Act. Hence, the ability of the

Company or its shareholders, or MRHFL to derive the tax benefits is dependent upon fulfilling such

conditions, which, based on business imperatives the Company or MRHFL faces in the future, the

Company or its shareholders, or MRHFL may or may not choose to fulfil.

4. The benefits discussed in the enclosed Annexure are not exhaustive. Further, the preparation of the

Annexure and its contents is the responsibility of management of the Company. We are informed that,

the Annexure is only intended to provide general information to the investors and is neither designed nor

intended to be a substitute for professional tax advice. In view of the individual nature of the tax

consequences and changing tax laws, each investor is advised to consult with his or her own tax

consultant with respect to the specific tax implications arising out of their participation in the Issue by

the Company. Neither are we suggesting nor are we advising the investor to invest in the Issue based on

this statement.

5. We do not express any opinion or provide any assurance as to whether:

(i) the Company or its shareholders, or MRHFL will continue to obtain these benefits in the future;

or

(ii) the conditions prescribed for availing of the benefits have been / would be met.

The contents of the enclosed Annexure are based on information, explanations and representations

obtained from the Company or its shareholders, or MRHFL and on the basis of our understanding of the

business activities and operations of the Company or MRHFL.

6. Our views expressed herein are based on the facts and assumptions indicated to us. No assurance is given

that the revenue authorities / courts will concur with the views expressed herein. Our views are based on

the existing provisions of the tax laws and their interpretation, which are subject to change from time to

time. We do not assume responsibility to update this Annexure consequent to such changes. We shall not

be liable to the Company for any claims, liabilities or expenses relating to this assignment except to the

extent of fees relating to this assignment, as finally judicially determined to have resulted primarily from

bad faith or intentional misconduct. We will not be liable to any other person in respect of this Annexure,

except under applicable law.

7. We conducted our examination in accordance with the Guidance Note on Reports or Certificates for

Special Purposes (Revised 2016) (‘the Guidance Note’) issued by the Institute of Chartered Accountants

of India (the ‘ICAI’).

91

8. The Guidance Note requires that we comply with the independence and other ethical requirements of the

Code of Ethics issued by the ICAI. We have complied with the relevant applicable requirements of the

Standard on Quality Control (‘SQC’) 1, Quality Control for Firms that Perform Audits and Reviews of

Historical Financial Information, and Other Assurance and Related Services Engagements.

9. This statement has been provided by B S R & Co. LLP, Chartered Accountants at the request of the

Company in accordance with the terms of reference agreed with the Company dated 20 July 2020 and

solely for the information of Kotak Mahindra Capital Company Limited, Citigroup Global Markets India

Private Limited, Axis Capital Limited, BNP Paribas, HDFC Bank Limited, HSBC Securities and Capital

Markets (India) Private Limited, ICICI Securities Limited, Nomura Financial Advisory and Securities

(India) Private Limited and SBI Capital Markets Limited (together referred to as the “Lead Managers”)

to assist them in conducting their due-diligence and documenting their investigations of the affairs of the

Company in connection with the Issue and is not to be used for any other purpose or to be distributed to

any other parties.

10. This statement is solely for your information and not intended for general circulation or publication and

is not to be reproduced or used for any other purpose without our prior written consent, other than the

purpose stated above. We, however, hereby, consent to this statement being used in the letter of offer and

in any other material used in connection with the Issue and submission of this statement to the Securities

and Exchange Board of India, the stock exchanges where the equity shares of the Company are listed,

Registrar of Companies, Maharashtra situated in Mumbai in connection with the Issue, as the case may

be. This statement may be relied on by the Lead Managers and the legal counsel to the Company and the

legal counsel to the Lead Managers.

For B S R & Co. LLP

Chartered Accountants

Firm’s Registration No: 101248W/ W-100022

Sagar Lakhani

Partner

Membership No: 111855

ICAI UDIN: 20111855AAAAFF5080

92

ANNEXURE TO THE STATEMENT OF POSSIBLE SPECIAL INCOME-TAX BENEFITS

AVAILABLE TO MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED (‘COMPANY’)

AND ITS SHAREHOLDERS UNDER THE APPLICABLE INCOME-TAX LAWS IN INDIA

Outlined below are the possible Special tax benefits available to the Company and its shareholders under the direct

tax laws in force in India. These benefits are dependent on the Company or its shareholders fulfilling the conditions

prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the special

tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the

future, it may not choose to fulfill.

1. Special tax benefits available to the Company under the Income tax Act, 1961 (‘the Act’) as amended by

Finance Act 2020, i.e. applicable for the Financial Year 2020-21 relevant to the assessment year 2021-22

A new section 115BAA has been inserted by the Taxation Laws (Amendment) Act, 2019 (“the Amendment

Act, 2019”) w.e.f. April 1, 2020 i.e. AY 2020-21 granting an option to domestic companies to compute

corporate tax at a reduced rate of 25.17% (22% plus surcharge of 10% and cess of 4%), provided such

companies do not avail specified exemptions/incentives and comply with other conditions specified in

section 115BAA.

The Amendment Act, 2019 further provides that domestic companies availing such option will not be

required to pay Minimum Alternate Tax (“MAT”) on its book profits under section 115JB. The CBDT has

further issued Circular 29/2019 dated October 02, 2019 clarifying that since the MAT provisions under

section 115JB itself would not apply where a domestic company exercises option of lower tax rate under

section 115BAA, MAT credit would not be available. Corresponding amendment has been inserted under

section 115JAA dealing with MAT credit. The Company has exercised the above option.

Under section 36(1)(vii) of the Act, the amount of any bad debts, or part thereof, written off as irrecoverable

in the accounts of the Company for the previous year are allowable as deduction. The deduction is limited

to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and

doubtful debts account including provisions made towards rural advances made under section 36(1)(viia)

of the Act.

Where a deduction has been allowed in respect of a bad debt or part thereof under the provisions of section

36(1)(vii), then, if any amount is subsequently recovered, the said amount is deemed to be profits and gains

of business or profession and is taxable accordingly to the extent it exceeds the deduction earlier allowed.

Under section 36(1)(viia) of the Act, in respect of any provision made for bad and doubtful debts, the

Company is entitled to a deduction for an amount not exceeding five percent of the total income (computed

before making any deduction under this section)

2. Special tax benefits available to the shareholders under the Act as amended by Finance Act 2020, i.e.

applicable for the Financial Year 2020-21 relevant to the assessment year 2021-22

There are no special tax benefits available to the shareholders (other than resident corporate shareholder) of

the Company arising out of the proposed rights issue.

With respect to a resident corporate shareholder, a new section 80M is inserted in the Finance Act, 2020

w.e.f. 1st April 2021, which provides that where the gross total income of a domestic company in any

previous year includes any income by way of dividends from any other domestic company or a foreign

company or a business trust, there shall, in accordance with and subject to the provisions of this section, be

allowed in computing the total income of such domestic company, a deduction of an amount equal to so

much of the amount of income by way of dividends received from such other domestic company or foreign

company or business trust as does not exceed the amount of dividend distributed by it on or before the due

date. The “due date” means the date one month prior to the date for furnishing the return of income under

sub-section (1) of section 139.

93

NOTES:

1 This statement does not discuss any tax consequences in the country outside India of an investment in the

Equity Shares. The subscribers of the Equity Shares in the country other than India are urged to consult their

own professional advisers regarding possible income tax consequences that apply to them.

2 The above statement covers only above mentioned special tax laws benefits and does not cover any general

direct tax law benefits or benefit under any other law.

3 This statement does not cover analysis of provisions of Chapter X-A of the Act dealing with General Anti-

Avoidance Rules and provisions of Multilateral Instruments

4 This statement is only intended to provide general information to the investors and is neither exhaustive or

comprehensive nor designed or intended to be a substitute for a professional tax advice. In view of the

individual nature of tax consequences and the changing tax laws, each investor is advised to consult his

or her or their own tax consultant with respect to the specific tax implications arising out of their participation

in the issue.

5 No assurance is given that the revenue authorities/courts will concur with the views expressed herein.

Our views are based on the existing provisions of law and its interpretation, which are subject to changes from time

to time. We do not assume responsibility to update the views consequent to such changes.

94

ANNEXURE TO THE STATEMENT OF POSSIBLE SPECIAL INCOME-TAX BENEFITS

AVAILABLE TO MAHINDRA RURAL HOUSING FINANCE LIMITED (‘MRHFL’) UNDER THE

APPLICABLE INCOME-TAX LAW IN INDIA

Outlined below are the possible Special tax benefits available to MRHFL and its shareholders under the direct tax

laws in force in India. These benefits are dependent on MRHFL or its shareholders fulfilling the conditions

prescribed under the relevant tax laws. Hence, the ability of MRHFL or its shareholders to derive the special tax

benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future, it

may not choose to fulfill.

Special tax benefits under the Income Tax Act, 1961, ( the Act”) as amended by Finance Act 2020, i.e. applicable

for the Financial Year 2020-21 relevant to the assessment year 2021-22 in the hands of MAHINDRA RURAL

HOUSING FINANCE LIMITED (‘MRHFL’)

• A new section 115BAA has been inserted by the Taxation Laws (Amendment) Act, 2019(“the Amendment

Act, 2019”) w.e.f. April 1, 2020 i.e. AY 2020-21 granting an option to domestic companies to compute

corporate tax at a reduced rate of 25.17% (22% plus surcharge of 10% and cess of 4%), provided such

companies do not avail specified exemptions/incentives and comply with other conditions specified in section

115BAA.

The Amendment Act, 2019 further provides that domestic companies availing such option will not be required

to pay Minimum Alternate Tax (“MAT”) on its book profits under section 115JB. The CBDT has further issued

Circular 29/2019 dated October 02, 2019 clarifying that since the MAT provisions under section 115JB itself

would not apply where a domestic company exercises option of lower tax rate under section 115BAA, MAT

credit would not be available. Corresponding amendment has been inserted under section 115JAA dealing with

MAT credit. MRHFL has exercised the above option.

• Under section 36(1)(vii) of the Act, the amount of any bad debts, or part thereof, written off as irrecoverable

in the accounts of the MRHFL for the previous year are allowable as deduction. The deduction is limited to

the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful

debts account including provisions made towards rural advances made under section 36(1)(viia) of the Act.

Where a deduction has been allowed in respect of a bad debt or part thereof under the provisions of section

36(1)(vii), then, if any amount is subsequently recovered, the said amount is deemed to be profits and gains

of business or profession and is taxable accordingly to the extent it exceeds the deduction earlier allowed.

• Under section 36(1)(viia) of the Act, in respect of any provision made for bad and doubtful debts, the MRHFL

is entitled to a deduction for an amount not exceeding five percent of the total income (computed before

making any deduction under this section).

• As per provisions of section 36(1)(viii) of the Act, a housing finance company is allowed a deduction of 20

percent of profits derived from the business of providing long term housing finance in India for residential

purposes and such amount should be carried to special reserve account created and maintained by the MRHFL.

Notes:

1 This statement does not discuss any tax consequences in the country outside India of an investment in the

Equity Shares. The subscribers of the Equity Shares in the country other than India are urged to consult their

own professional advisers regarding possible income tax consequences that apply to them.

2 The above statement covers only above mentioned special tax laws benefits and does not cover any general

direct tax law benefits or benefit under any other law.

3 This statement does not cover analysis of provisions of Chapter X-A of the Act dealing with General Anti-

Avoidance Rules and provisions of Multilateral Instruments

4 This statement is only intended to provide general information to the investors and is neither exhaustive or

comprehensive nor designed or intended to be a substitute for a professional tax advice. In view of the

individual nature of tax consequences and the changing tax laws, each investor is advised to consult his

95

or her or their own tax consultant with respect to the specific tax implications arising out of their participation

in the issue.

5 No assurance is given that the revenue authorities/courts will concur with the views expressed herein.

Our views are based on the existing provisions of law and its interpretation, which are subject to changes from time

to time. We do not assume responsibility to update the views consequent to such changes.

96

SECTION IV: ABOUT OUR COMPANY

OUR BUSINESS

Overview

We are one of the leading deposit taking non-banking finance companies with customers primarily in the rural and

semi-urban markets of India. We are primarily engaged in providing financing for new and pre-owned auto and

utility vehicles (including three wheelers), tractors, cars and commercial vehicles. We also provide housing

finance, manage mutual funds, personal loans, financing to micro, small and medium enterprises, insurance

broking and mutual fund distribution services. In addition, we provide wholesale inventory-financing to dealers

and retail-financing to customers in the United States for purchase of Mahindra tractors and utility vehicles

through Mahindra Finance USA LLC (“MF USA”), our Associate, which has entered into a joint venture

agreement with De Lage Landen Financial Services Inc., which is a member of the Rabobank group. In August

2019, we entered into a joint venture with Ideal Finance Limited to offer financing services in Sri Lanka. We are

part of the Mahindra group, which is one of the largest business conglomerates in India.

We have established a pan-India presence, spanning 27 states and seven union territories through 1,322 offices,

as of March 31, 2020. We primarily focus on providing financing for purchases of auto and utility vehicles

(including three wheelers), tractors, cars, commercial vehicles and construction equipment, and pre-owed vehicles

which accounted for 27.7%, 16.4%, 19.2%, 15.3% and 18.1% of estimated total value of the assets financed by

our Company, respectively, for the Financial Year 2020. We benefit from our close relationships with dealers and

long-standing relationships with OEMs, which allows us to provide on-site financing at dealerships. We are also

able to offer loan products to our existing as well as new customers through our direct marketing initiative.

Mahindra & Mahindra, our promoter and the flagship company of the Mahindra group, had a market capitalization

of ₹ 634.90 billion as of June 30, 2020. The Mahindra group operates in several businesses and has a strong

presence in the automotive, farm-equipment, information technology, financial services, aerospace, real estate,

hospitality and logistics businesses and after-market sales and services of pre-owned vehicles.

The following table sets forth certain key details of our Company, on a consolidated basis, for the periods

indicated:

(₹ in million)

As of / For the year ended March 31,

2020 2019

Total assets* 817,925.78 745,759.69

Total Income 119,964.56 104,308.55

Interest Income 114,576.13 99,695.29

Profit after tax for the year 10,858.18 18,672.82

*Total assets comprise financial assets (including loan receivables, net of impairment provisions) and non-financial assets.

Our total income and profit after tax for the three months ended June 30, 2020 was ₹ 30,686.84 million and ₹

4,321.19 million, respectively. As of June 30, 2020, our Company had 1,324 offices located in 27 states and

seven union territories in India. For further details, see “Recent Developments” on page 60.

Our Competitive Strengths

Our competitive strengths are as follows:

Operating knowledge of Rural and Semi-Urban Markets

We have over 25 years of operating experience primarily in rural and semi-urban markets, which has led to a

significant understanding of local characteristics of these markets and has allowed us to cater to the unique needs of

our customers. We have adapted to and built expertise in markets that are affected by limitations of rural

infrastructure and have developed a diversified customer base of farmers, car-owners, transport agencies, small

businessmen and home-owners. For origination and collection, we hire employees with knowledge of the local

markets and have also implemented a de-centralized process to approve loans that meet pre-determined criteria.

Our field executives utilize technology solutions such as tablets and a mobile application to record data while

collecting loan payments at the customer’s home or business location. We further analyze such data to enhance

97

our productivity and improve efficiency. On account of the nationwide lockdown due to the COVID-19 pandemic,

we have been communicating with our customers by calling them and sending them intimations on their mobile

phones. Our high level of interaction with our customers improves our understanding of their requirements and

enables us to be more responsive to local market demand. We believe that our knowledge of the rural and semi-

urban markets gained over the years is a key strength that has enabled us to become one of India’s leading NBFCs.

Extensive Pan-India Distribution Network

We have an extensive pan-India distribution network with 1,322 offices spanning across 27 states and seven union

territories, as of March 31, 2020. Our widespread office network reduces our reliance on any one region in India

and allows us to apply best practices developed in one region to other regions. Our geographic diversification also

mitigates some of the regional, climatic and cyclical risks, such as heavy monsoons or droughts. In addition, our

extensive office network benefits from a de-centralized approval system, which allows each office to grow its

business organically as well as leverage its customer relationships by offering distribution of insurance products

and mutual funds. We service multiple products through each of our offices, which improves total sales. We

believe that the challenges inherent in developing an effective office network in rural and semi-urban areas

provide us with a significant first mover advantage over our competitors in these areas.

Streamlined Approval and Administrative Procedures and Effective Use of Technology

We believe that we benefit from our streamlined company-wide policy driven approval and administrative

procedures that are supplemented by our employee training and integrated technology. Our local offices are

responsible for appraisal, disbursement, collection and delinquency management of loans. We approve loans in a

prompt manner and are able to regularly monitor origination, disbursement and collection with our integrated

technology. The technology solutions that our employees use provide us with customer information including real

time installment collection, and certain risk management information in a prompt manner, thus enabling better

monitoring. The recording of data in this manner enables us to provide intimation by SMS to customers in a

prompt manner at every stage of the transaction and we believe, it also allows us to handle customer queries more

efficiently. Our customers can utilize our mobile application and have access to features such as viewing their

statement of accounts and making their payments online. We also utilize digital payment technologies to collect

outstanding amounts from our customers.

Track Record of Strong Customer and Dealer Relationships

We believe that we benefit from strong relationships with our customers, developed from long-term in-person

customer contact, the reach of our office network, local knowledge and our continued association with

automotive, farm equipment and car dealers. As part of our customer-centric approach, we recruit employees

locally to increase our familiarity with the local customers and area. We believe that this personal contact, which

includes visits by our employees to a customer’s home or business to collect installment payments and periodic

calls to our customers, increases the likelihood of repayment, encourages repeat business, establishes personal

relationships and helps build our reputation for excellent customer service. We also believe that our Company’s

close relationships with dealers helps us develop and maintain strong customer relationships.

Brand Recall and Synergies with the Mahindra Group

Mahindra & Mahindra, our Promoter and the flagship company of the Mahindra group has a presence of over

seven decades. Mahindra & Mahindra has been selling automotive and farm equipment in the semi-urban and

rural markets of India. The Mahindra group is one of the largest business conglomerates in India and has a strong

presence in the automotive, farm-equipment, information technology, financial services, aerospace, real estate,

hospitality and logistics businesses and after-market sales and services of pre-owned vehicles. We believe that

our relationship with the Mahindra group provides brand recall and we will continue to derive significant

marketing and operational benefits by leveraging the Mahindra brand.

Access to Cost-Effective Funding

We believe that we are able to access cost-effective borrowings due to our strong brand equity, stable credit

history, superior credit ratings and conservative risk management policies. Historically, we have secured cost-

effective funding from a variety of sources such as bank loans, external commercial borrowings, securitization

and assignment of receivables, issuance of non-convertible debentures, masala bonds and commercial papers,

fixed deposits and inter-corporate deposits. Our Company maintains borrowing relationships including with

98

several domestic and multinational banks, mutual funds and insurance companies. For details of our credit ratings,

see “-Our Credit Ratings”. For the Financial Years 2020 and 2019, our Company’s average cost of borrowings

was 8.7% and 8.5%, respectively.

Experienced Board and Management Team

Our Board, including the independent directors, have extensive experience in the financial services and banking

industries in India. We also have an experienced management team, which is supported by a capable and motivated

pool of employees. We have successfully recruited and retained talented employees from a variety of backgrounds,

including credit evaluation, risk management, treasury, technology and marketing. Our senior managers have

diverse experience in various financial services and functions related to our business. Our senior managers have

an in-depth understanding of the specific industry, products and geographic regions they cover, which enables

them to appropriately support and provide guidance to our employees. Our management has a track record of

entering and growing new lines of business, such as insurance broking, housing finance and asset management.

Our Strategies

Our business strategies are as follows:

Responding to challenges posed by the COVID-19 Pandemic

On March 14, 2020, India declared COVID-19 as a “notified disaster” and imposed a nationwide lockdown

beginning on March 25, 2020. The lockdown remains in force in many cities, with limited and progressive

relaxations being granted for movement of goods and people in other places and cautious re-opening of businesses

and offices. We have taken a number of steps to address the challenges posed by COVID-19, including the

following:

• Maintaining business continuity and resuming our operations: In order to minimize the disruption in our

operations and protect the health and safety of our employees, we have leveraged our technology systems and

undertaken a number of measures to support our employees working from home by providing them with

laptops and tablets and conducting on-line training sessions. We will continue to enhance our digital

capabilities and use of technology to improve our operational efficiencies. We continue to resume operations

in a phased manner, in accordance with the directives issued by the central and state governments and the

district authorities. The health and safety measures undertaken by us include issuing safety guidelines for our

employees, conducting regular fumigation of office premises, conducting thermal screening of employees

and customers visiting our branch offices and providing masks and hand sanitizers at our offices. As of June

30, 2020, we have resumed operations at over 1,100 branch offices. We also held virtual dealer council

meetings and created special support packages for dealers.

• Moratorium: In accordance with our Board approved moratorium policy, our Company has granted

moratorium on the payment of installments falling due between March 1, 2020 and August 31, 2020 to

all eligible borrowers, in line with RBI guidelines. We inform our customers of the interest that would accrue

and be payable by them if the moratorium period is availed by our customers. In order to cover the

contingencies that may arise due to the COVID-19 pandemic, we have incorporated management overlays in

the measurement of impairment loss allowance and recognized additional provision of ₹ 7,285.30 million in

our consolidated statement of profit and loss for the quarter and year ended March 31, 2020 and ₹ 6,644.59

million in our consolidated statement of profit and loss for the quarter ended June 30, 2020. As of the date of

this Letter of Offer, the pandemic situation is still evolving and it is difficult to determine with certainty the

impact of moratorium on our business and we may be required to adopt additional steps in future, including

by way of making higher provisions which would impact our overall profitability.

• Collections: Our field executives typically visit customers to collect installments as they become due.

However, on account of the “stay-at-home” orders issued in various jurisdictions, we have been calling our

customers and sending them intimations on phone. We inform our customers of the different digital modes

through which they can make their payments and we intend to actively focus on our collections after the

completion of the moratorium period.

• Maintaining our liquidity position and reducing our cost of borrowings: We have undertaken steps to ensure

that we have adequate liquidity to meet our financial and other commitments. We continue to evaluate various

funding opportunities so as to continue maintaining adequate liquidity and lower our cost of funds.

99

• Reduce our operational expenditure: We intend to reduce our operating expenses by undertaking several

initiatives including (i) renegotiating the rental agreements for our branch offices; (ii) renegotiating the

contracts entered into with various service providers; (iii) outsourcing certain functions that are currently

being undertaken internally; (iv) renegotiating the incentive structure for dealers; (v) limiting new hiring; and

(vi) centralizing back-end processes.

• Stress testing: We have conducted specific stress tests to gauge the impact of COVID-19 in different scenarios

and we actively monitor economic developments by performing sensitivity analysis on our loan portfolio to

prepare for dealing with various eventualities.

Focus on the Rural and Semi-Urban Markets to Grow our Market Share

In the long-term, we intend to expand our office network and increase the market share of our existing products

and services in the rural and semi-urban markets of India. In opening each office site, we analyze the local market

and proximity to target customers. We believe our customers appreciate this convenience and that well-placed

office sites allow us to attract new customers. We also seek to expand our dealer relationships by strengthening

our presence at dealerships and by continuing to engage dealers of a range of OEMs for customer relationships.

We believe that this strategy will increase our customer base and revenues and mitigate risks associated with

deriving a substantial percentage of our vehicle financing revenues from purchasers of M&M vehicles. In order

to enhance our dealer relationships, we also provide trade funding to assist with the working capital requirements

of these dealers. We believe that we are in a position to leverage our existing distribution infrastructure to increase

our penetration in markets where we already have a presence.

Leverage Technology to Improve Operational Efficiency and Customer Experience

As we continue to expand our geographic reach and scale of operations, we intend to further develop and integrate

our technology to support our growth, improve the quality of our services and approve loans at a faster rate. We

utilize tablets and a mobile application that enables our employees to originate loans and issue receipts. We have

connected all our offices to a centralized data centre in Mumbai and our technology platforms help us intimate

customers through SMS, handle customer queries more efficiently, enhance collection management information

systems, record customer commitments and enable better internal checks and controls. Our use of technology will

allow us to continue providing streamlined approval and documentation procedures and reduce incidence of error.

Diversify Product Portfolio

We intend to improve the diversity of our product portfolio both, within our vehicle financing business as well as

through the introduction and growth of other financial products. We intend to grow the share of our disbursements

to pre-owned vehicles, light commercial vehicles and construction equipment to capture market share in what we

believe is a growth area and improve the diversity of our loan exposure. In addition, we have recently started

offering small ticket personal loans. Through our direct marketing initiative, we target existing and new customers

to cater to their financing requirements, thus generating new business and diversifying our loan assets. We will

continue to focus on growing our rural housing portfolio through our subsidiary MRHFL, which we believe is in

a unique position to cater to a large and untapped customer base.

DESCRIPTION OF OUR BUSINESS

Our Vehicle Financing Business

We are primarily engaged in asset financing of vehicles, which we divide into five categories: (a) auto and utility

vehicles (including three wheelers); (b) tractors; (c) cars; (d) commercial vehicles and construction equipment;

and (e) pre-owned vehicles. Our customers include various transport operators, farmers, small businesses and

self-employed and salaried individuals.

Income from our vehicle financing business constituted 92.0% and 92.0% of our total income for the Financial

Years 2020 and 2019, respectively. Our vehicle financing business comprised 83.2% and 85.1% of our total assets

for the Financial Years 2020 and 2019, respectively.

Our Company’s estimated composition of assets financed in each of our vehicle financing businesses is set forth

below:

100

Financial Year

2020 2019

Auto and Utility Vehicles (including three wheelers) 27.7% 24.5%

Tractors 16.4% 18.1%

Cars 19.2% 19.6%

Commercial Vehicles and Construction Equipment 15.3% 19.1%

Pre-owned Vehicles 18.1% 14.4%

Office Network

As of March 31, 2020, our Company had 1,322 offices located in 27 states and seven union territories in India.

Our offices are authorized to approve loans within prescribed guidelines and have appropriate staffing to process

and monitor the loans made. Branch office employees report to their respective vertical heads, who in turn, report

to their circle office and the head office in Mumbai.

As of March 31, 2020, the north, south, west, central and eastern regions of India contributed 29%, 20%, 15%,

10% and 26% of our Company's loan assets, respectively. Further, during the Financial Year 2020, our estimated

value of assets financed in the north, south, west, central and eastern regions of India accounted for 31%, 19%,

14%, 12% and 24% of our Company’s total estimated value of assets financed, respectively.

The distribution of offices across India by state as of March 31, 2020 is set out in the map below:

2

20

35 28

20

35 19 3

2

76 128 40

1 60

4 1

78 113

31 67 4

45 1 30

121

57

2 72 66

2 1

85 73

101

Our Operations - Lending Policy

Once we identify a customer and complete the application, a field executive obtains relevant information from

the customer and prepares reports such as the vehicle inspection and evaluation report and the field investigation

report. For existing customers, the field executive also evaluates the customer’s track record of payments. We

require that the customer provide a guarantor. The field executive then recommends whether the loan should be

approved based on our prescribed guidelines and forwards a recommendation to the office manager.

Office managers primarily evaluate a customer’s ability to repay. We typically approve loans within two days of

receiving a complete application together with relevant supporting documents. For the trade advances that we

provide to authorized dealers of OEMs, we also undertake background checks with the vehicle manufacturer, credit

history, business volumes and seasonality. Our head office sets and communicates limits on trade advances for

dealers. For SME financing, there are teams involved which comprise customer relationship, credit, risk and

compliance.

At the outset of loan disbursement, we give our customers an option to pay using methods such as cash, cheque,

automated clearing house and other digital modes of payment - at a frequency that is fixed after determining the

customer’s expected cash flow. For cash collections, our field executives visit customers to collect installments

or the customers visit our branch offices, as and when the installments become due. We believe that our loan

recovery procedure is well-suited to rural and semi-urban markets. The entire collection process is administered

in-house. If a customer misses installment payments, our field executives identify the reasons for default and

initiate action pursuant to our internal guidelines. In the event of default under a loan agreement, we may initiate

the process for re-possessing collateral. We generally use external agencies to re-possess collateral. Where

appropriate, our collections department coordinates with our legal team and external lawyers to initiate and

monitor legal proceedings.

Asset Quality

We maintain our asset quality by adhering to credit evaluation standards, limiting customer and vehicle exposure

and interacting with customers directly and regularly. We ensure that prudent LTV ratios are adhered to while

lending. We ensure prompt collection and proper storage of post-disbursement documents. We periodically

inspect, either by ourselves or by internal auditors, our customers and the assets financed on a random basis. Our

office accountants conduct tele-verification of the customers’ key details and close follow-up is undertaken to

ensure timely collection and control overdues.

The provisioning norms that our Company follows are set forth below:

Stage Description Provision Mechanism

Stage 1 0- 30 days past due PD * LGD * Stage 1 Asset

Stage 2 > 30 to <= 90 days past due PD * LGD * Stage 2 Asset

Stage 3 > 90 days past due Exposure as at reporting date less

computed carrying amount

considering the EAD net of LGD, PV

and interest accrued on the basis of

Net carrying value

PD – probability of default; LGD – loss given default; EAD – exposure at default; PV – present value of actual cash flows

discounted at contractual effective interest rate as at date of default; Net carrying value – EAD less aggregate of loss at LGD

rate and PV of actual cash flows from default date to reporting date

Further, pursuant to a circular dated March 13, 2020 issued by the Reserve Bank of India on Implementation of

Indian Accounting Standards, NBFCs are required to create an impairment reserve for any shortfall in impairment

allowances under Ind AS 109 and Income Recognition, Asset Classification and Provisioning norms (“IRACP”)

(including provision on standard assets). Our Company is not required to transfer any amount to the impairment

reserve as the impairment allowances under Ind AS 109 made by our Company exceeds the total provision

required under IRACP (including standard asset provisioning), as at March 31, 2020.

For further details, see “Selected Statistical Information” on page 55.

102

Our Other Business Initiatives

For the Financial Years 2020 and 2019, income from our business other than vehicle financing were 8.0% and

8.0% of our total income, respectively.

Housing Finance

We provide housing finance to individuals through our subsidiary, MRHFL, a registered housing finance

company. We grant housing loans for purchase, construction, extension and renovation of house property. Our

housing finance business currently operates in 14 states and one union territory.

MRHFL disbursed an aggregate ₹ 18,764.14 million and ₹ 25,810.93 million in housing loans for the Financial

Years 2020 and 2019, respectively. Our housing finance business as of March 31, 2020 and 2019 aggregated ₹

78,700.80 million, or 9.6%, of our total assets and ₹ 76,892.49 million, or 10.3% of our total assets, respectively.

MRHFL recognized total income of ₹ 15,276.05 million and ₹ 13,839.07 million, profit before tax of ₹ 2,055.99

million and ₹ 3,661.64 million and a profit after tax of ₹ 1,485.57 million and ₹ 2,504.69 million for the Financial

Years 2020 and 2019, respectively. MRHFL had a net worth of ₹ 12,481.41 million and ₹ 11,270.83 million as

of March 31, 2020 and 2019, respectively.

Insurance Broking

We provide insurance broking solutions to individuals and corporates through our wholly-owned subsidiary,

MIBL. MIBL has a “composite broking license” from the Insurance Regulatory and Development Authority,

which allows MIBL to undertake broking of life, non-life and reinsurance products. It has been awarded the ISO

9001:2015 Certification for Quality Management Systems for services related to broking of life and non-life

insurance products to corporate and retail customers.

MIBL recognized total income of ₹ 3,368.89 million and ₹ 3,233.64 million, profit before tax of ₹ 739.02 million

and ₹ 1,028.94 million, and profit after tax of ₹ 533.62 million and ₹ 714.94 million for the Financial Years 2020

and 2019, respectively.

SME Financing

Our Company provides loans for varied purposes such as project finance, equipment finance, working capital

finance and bill discounting services to micro, small and medium enterprises. Our Company intends to leverage

its existing dealers and the strengths of the Mahindra group to target the auto ancillary, engineering and food and

agri-processing sectors through our SME business.

Mutual Fund Business

Mahindra Manulife Investment Management Private Limited (formerly known as Mahindra Asset Management

Company Private Limited), which was incorporated on June 20, 2013, has been appointed as the asset

management company of ‘Mahindra Manulife Mutual Fund’. Mahindra Manulife Mutual Fund was constituted as

a trust on September 29, 2015 and was registered with SEBI on February 4, 2016 under the registration code

MF/069/16/01. Our Company is the sponsor to the mutual fund and Mahindra Manulife Trustee Private Limited

(formerly known as Mahindra Trustee Company Private Limited), a subsidiary of our Company, is the trustee to

the mutual fund.

Two Wheelers, Consumer Durable and Personal Loans

Our Company provides personal loans primarily to its existing customers. Customers typically seek personal loans

for weddings, children’s education, medical treatment or working capital for a small or medium-sized enterprise.

These loans are typically repayable in monthly or quarterly installments.

Mahindra Finance USA, LLC, United States

We provide wholesale inventory-financing to dealers and retail-financing to customers in the United States for

purchase of Mahindra tractors through MF USA, our Associate, which has entered into a joint venture agreement

with De Lage Landen Financial Services, Inc., in which our Company holds 49% of the equity share capital.

103

Corporate Structure (as per the Companies Act, 2013)

The following chart outlines our corporate structure:

1. Inclusion Resources Private Limited, a member of AXA XL Group holds 20% of the outstanding equity shares of MIBL.

2. The MRHFL Employee Welfare Trust and employees hold 1.57% of the outstanding equity shares of MRHFL. 3. An Associate of the Company, which has entered into a joint venture agreement with De Lage Landen Financial Services Inc., a

member of the Rabobank group. It holds 51.0% of the outstanding equity shares of MF USA.

4. Manulife Investment Management (Singapore) Pte. Ltd. entered into a share subscription agreement with our Company, pursuant to which it holds 49.0% of the outstanding equity shares of MMIMPL and MMTPL. This transaction was completed on April 29,

2020.

5. Our Company has entered into a share subscription, share purchase and shareholders agreement dated August 20, 2019 to acquire up to 58.26% of the outstanding equity shares of IFL and has remitted an amount of ₹ 440 million towards acquiring 38.2% of the

outstanding equity shares of IFL.

Note: Our Company formed Mahindra Finance CSR Foundation as a wholly owned subsidiary on April 2, 2019 for undertaking all CSR initiatives.

Treasury Operations

Our treasury operations help us meet our funding requirements and manage short-term surpluses. Our fund

requirements are predominantly sourced through term loans (rupee term loans and external commercial

borrowings), issuance of non-convertible debentures, masala bonds and commercial papers, fixed deposits and

securitization of receivables. We believe that through our treasury operations, we maintain our ability to repay

borrowings as they mature and obtain new borrowings at competitive rates.

The principal components of our secured and unsecured loans, on a consolidated basis, as of the dates indicated

are set out below: (₹ in million)

As of March 31

2020 2019

Secured Unsecured Total Secured Unsecured Total

Debt Securities 193,466.11 3,980.00 197,446.11 215,004.73 32,154.12 247,158.85

Borrowings (Other than Debt

Securities)

326,113.86 7,157.50 333,271.36 234,360.86 11,966.35 246,327.21

Deposits 0.00 87,813.90 87,813.90 0.00 56,309.34 56,309.34

Subordinated Liabilities 0.00 37,811.04 37,811.04 0.00 38,220.81 38,220.81

Grand Total 519,579.97 136,762.44 656,342.41 449,365.59 138,650.62 588,016.21

In our vehicle financing, SME Finance, housing finance, personal loans businesses, we generate profit from the

margin maintained due to the difference between the interest rates on our interest-earning assets, which are the loans

we extend, and interest-bearing liabilities, which are our borrowings. The average cost of borrowings, on a

consolidated basis, for the Financial Years 2020 and 2019 was 8.7% and 8.5%, respectively.

Our Company

Mahindra

Insurance Brokers

Limited1

80.0% 98.43% 49.0% 51.0% 51.0%

Mahindra

Rural

Housing

Finance

Limited2

Mahindra

Finance USA

LLC.3

Mahindra

Manulife

Investment

Management

Private Limited4

Ideal Finance

Limited,

Sri Lanka5

Mahindra

Manulife

Trustee

Private

Limited4

38.2 %

Mahindra & Mahindra Limited

51.2%

104

Capital Adequacy Ratio

Our Company is subject to the capital adequacy requirements prescribed by RBI, pursuant to which our Company

is required to maintain a capital adequacy ratio consisting of Tier I and Tier II Capital. The total of Tier II Capital

at any point of time, cannot exceed 100% of Tier I Capital. The minimum capital ratio as prescribed by RBI

guidelines and applicable to our Company, consisting of Tier I and Tier II capital, cannot be less than 15% with

Tier I not being below 10% of our aggregate risk weighted assets on-balance sheet and of risk adjusted value of

off-balance sheet. For details of our capital adequacy ratios, see “Selected Statistical Information” on page 55.

Risk Management

Risk management forms an integral part of our business. We continue to improve our policies and implement our

policies rigorously for the efficient functioning of our business. As a lending institution, we are exposed to various

risks that are related to our lending business and operating environment. Our objective in our risk management

processes is to measure and monitor the various risks that we are subject to and to follow policies and procedures

to address these risks. We do so through our risk management architecture, which includes a team, headed by our

Chief Financial Officer that identifies, assesses and monitors all of our principal risks. The major types of risk we

face in our businesses are credit risk, interest rate risk, operational risk, liquidity risk, cash management risk, asset

risk and foreign exchange risk. Our Board has also adopted a foreign exchange and interest rate risk management

policy.

Credit Risk

Our credit approval policy includes a proposal evaluation and investigation procedure for credit appraisal. We

manage our credit risk by evaluating the creditworthiness of our customers, carrying out cash flow analysis, setting

credit limits, obtaining collateral and setting prudent LTV ratios. Actual credit exposures, credit limits and asset

quality are regularly monitored at various levels.

Interest Rate Risk

We assess and manage the interest rate risk on our balance sheet by managing our assets and liabilities. Our

Company primarily lends to our customers on a fixed interest rate basis and we typically raise capital for our

lending operations on a fixed interest rate basis through the issuance of non-convertible debentures and accepting

fixed deposits. In addition, our Company typically avails loans from banks that are linked to MCLR. For foreign

exchange borrowings linked to LIBOR, we undertake derivative transactions to help manage the risks we may

incur from being exposed to liabilities at floating rates.

Operational Risk

As one of the features of our lending operations, we offer a speedy loan approval process and therefore have

adopted de-centralized loan approval systems. In order to control our operational risks, we have adopted clearly

defined loan approval processes and procedures. We also attempt to mitigate operational risk by maintaining a

comprehensive system of internal controls, establishing systems and procedures to monitor transactions,

maintaining key back-up procedures and undertaking contingency planning. In addition, we have appointed local

audit firms to conduct internal audits at a number of our offices to assess adequacy of and compliance with our

internal controls, procedures and processes. Reports of the internal auditors as well as the action taken on the

matters reported upon are discussed and reviewed at the Audit Committee meetings.

Liquidity Risk

We attempt to minimize liquidity risk through a mix of strategies, including assignment of receivables and short-

term funding. We maintain additional liquidity which is primarily invested in fixed deposits and mutual funds in

order to meet our Company’s obligations and to meet the temporary requirement of market distortions. We also

monitor liquidity risk through our Asset Liability Committee of the Board and our Operating Committee.

Monitoring liquidity risk involves categorizing all assets and liabilities into different maturity profiles and

evaluating them for any mismatches in any particular maturities, particularly in the short-term. Through our asset

and liability management policy, we have capped maximum mismatches in various maturities in line with

guidelines prescribed by RBI.

105

We manage short-term mismatches between assets and liabilities by issuing commercial paper or obtaining

funding from banks. A summary of our Company’s asset and liability maturity profile, on a standalone basis, as

of March 31, 2020, which is based on certain estimates, assumptions and our prior experience of the performance

of its assets, is set out below: (₹ in million)

Up to One

Month

Between One

Month and

One Year

Between

One and

Three

Years

Between

Three and

Five years

Over Five

Years Total

Liabilities / Outflow

Equity Capital - - - - 1,230.69 1,230.69

Preference and Surplus - - - - - -

Reserves and Surplus - - - - 102,112.02 102,112.02

Total Borrowings1 3,706.26 133,006.18 240,666.69 58,375.55 71,478.04 507,232.72

Current Liabilities and

Provisions2

11,659.11 16,709.48 12,535.30 2,271.89 6,998.66 50,174.44

Total 15,365.37 149,715.67 253,201.99 60,647.43 181,819.42 660,749.88

Assets / Inflow

Fixed Assets 0.89 15.62 184.80 280.50 1,098.71 1,580.51

Investments3 14,129.36 19,057.49 1,078.71 745.33 23,483.67 58,494.56

Cash and Bank Balance 6,825.75 2,811.25 3,816.08 4,436.27 - 17,889.35

Inflow from Loans and

Advances4

17,948.39 164,309.84 268,816.68 82,884.30 24,071.17 558,030.37

Other Assets5 317.50 8,499.92 7,090.11 42.25 8,805.31 24,755.09

Unutilized Bank Lines 5,496.50 - -(5,496.50) - - -

Total 44,718.39 194,694.12 275,489.87 88,388.64 57,458.86 660,749.88

Surplus / (Deficit) 29,353.02 44,978.46 22,287.88 27,741.20 -(124,360.56) -

Cumulative Surplus

(Deficit)

29,353.02 74,331.48 96,619.35 124,360.56 - -

Notes: The asset and liability maturity profile is prepared on the basis of previous GAAP and IRACP norms prescribed by the RBI and filed with

the RBI as per the guidelines issued by them.

1. Total Borrowings include borrowings from all types of instruments, i.e. debt securities, borrowings (other than debt securities), deposits and subordinated liabilities.

2. Current Liabilities and Provisions include interest accrued but not due on borrowings, trade payables for finance & expenses, lease

liabilities, insurance premium payable, salary, bonus and performance payable and provision for employee benefits and provision for loan commitments.

3. Investments include equity investments in subsidiaries and joint venture/associate, investments in units of mutual funds, government

securities and debt securities. 4. Inflows from Loans and advances include loans under retail loans, SME financing, bills of exchange, trade advances, inter- corporate

deposits to related parties and trade receivables.

5. Other Assets include Term deposits with banks, interest accrued on investments / other deposits, prepaid expenses, capital advances, intangible assets, other advances, exchange gain receivable on forward contracts on FCNR loans and deferred premium on FCNR

loan forward contracts.

Assumptions: 1. Bank borrowings, excluding commercial paper mature between one to three years. Bank borrowings are normally renewed on maturity.

Banks allow funds to be deployed on lease/hypothecated loan assets, which are for a period of one to four years. Such assets are

lodged as security and hypothecated to consortium banks.

2. Interest accrued but not due on fixed deposits is based on maturity profile of the fixed deposits.

3. Maturity of contingent liabilities has not been estimated as they may or may not crystallize.

4. Non NPA Debtors are assumed to be recovered equally with a period of six months.

5. NPAs net of NPA provision to mature after a period of five years. 6. Deferred tax asset to mature after five years.

7. Un-utilized bank lines can be accessed as and when required as to bridge excess of outflow over inflow, if any.

8. The unutilized limit with the banks as of March 31, 2020 is estimated at ₹ 5,500 million after considering cash credit balance as per bank statement.

9. Additional unutilized bank term loans / working capital loans sanctioned and documents executed approximately ` 9,460 million not

included for above calculation.

Cash Management Risk

To address cash management risks, we have developed advanced cash management checks that we employ at

every level to track and tally accounts. Moreover, we conduct regular audits to ensure the highest levels of

compliance with our cash management systems. Further, we have a money insurance policy in respect of cash in

safe and cash in transit.

106

Asset risk

We engage experienced repossession agents to repossess assets of defaulting customers. We ensure that these

repossession agents follow legal procedures and take appropriate care in dealing with customers for seizing assets.

We have entered into a collaboration with Mahindra First Choice Wheels to leverage their expertise in undertaking

auctions and stockyard management.

Foreign Exchange Risk

While substantially all our revenues is denominated in rupees, we have incurred and expect to incur indebtedness

denominated in currencies other than rupees for our lending requirements. The details of our Company’s

outstanding foreign currency loans as of March 31, 2020 are set out below: (in million)

Currency USD EUR

FCNR 24.27 -

ECB 340 24.00

These loans have been hedged either through a cross currency swap or a combination of interest rate swaps and

forward contracts so as to convert them into fixed rate INR liability. We did not have any un-hedged foreign

currency exposure as on March 31, 2020.

Risk Management Architecture

In order to address the risks that are inherent to our business, we have developed a risk management architecture

that includes monitoring by our Board through the Audit Committee, the Asset Liability Committee and the Risk

Management Committee.

• Audit Committee. Our Audit Committee acts as a link between the statutory and internal auditors and our

Board. It is authorized to select and establish accounting policies, review reports of the statutory and the

internal auditors and meet with them to discuss their findings, suggestions and other related matters. Our

Audit Committee has access to all information it requires from our Company and can obtain external

professional advice whenever required.

• Asset Liability Committee. Our Asset Liability Committee reviews the working of the Asset Liability

Operating Committee, its findings and reports in accordance with the guidelines of RBI. Our Asset

Liability Committee reviews risk management policies related to liquidity, interest rates and investment

policies.

• Risk Management Committee. Our Risk Management Committee manages the integrated risk, informs our

Board about the progress made in implementing a risk management system and periodically reviews the

risk management policy followed by our Company.

Our Credit Ratings

Our present credit ratings are set forth below:

Agency Instrument Rating Outlook

India Ratings

Long term (including market linked

debentures) and subordinated debt; bank

facilities

IND AAA

IND PP-MLD AAA emr

Stable

Short term debt IND A1+ -

CARE Ratings Long term and subordinated debt CARE AAA Stable

Brickwork Long term and subordinated debt BWR AAA Stable

CRISIL

Fixed deposit program FAAA Stable

Short term debt CRISIL A1+ -

Long term and subordinated debt; bank

facilities

CRISIL AA+ Stable

107

Employees

As of March 31, 2020, our Company employed 21,862 employees and our Subsidiaries employed 10,820

employees.

We are focused on retaining high quality talent and our retention initiatives include job rotation, quarterly reviews

and incentive-based compensation. We invest a significant amount of time and resources for training our

employees and have established training programs for our employees on a continuous basis and we intend to

continue investing in recruiting, training and maintaining a rewarding work environment. In addition to ongoing

on-the-job training, we provide employees with courses in specific areas as required. To create a sense of

ownership among and as a long-term incentive to our employees, our Company has adopted employee stock

option schemes to issue options convertible into Equity Shares to select employees linked to their performance.

We also use employee recognition programs, such as Dhruv Tara, Annual Convention Award and Achievement

Box, to reward our employees for performance.

Awards and Accolades

Our Company has received several awards during the Financial Year 2020, including:

• Awarded the Indian Oil Logistics Award CV Financer of the Year 2019;

• Awarded the 1st position for Excellence in Cost Management – 2018 at the 16th National Awards for

“Excellence in Cost Management – 2018” in Banking, Financial Services and Insurance Category;

• Awarded the IDF CSR Award 2019 for participation in Resource Mobilization for Humanitarian Causes;

• Recognized as the only financial institute from India to be in the Dow Jones Sustainability Index for

Emerging Markets category, for the 7th year in a row;

• Ranked 11th amongst “25 Best Large Workplaces in Asia 2019”, by Great Place to Work Institute; and

• Awarded ‘Best Employer’ by Aon Best Employers – India 2019 programme.

Corporate Social Responsibility

Our Company’s CSR initiatives are focused on improving the lives of people in rural areas and contributing to

the well being of people. We have undertaken CSR initiatives in several areas including education with

programmes such as Mahindra Finance Scholarship, which provides scholarships to students from economically

disadvantaged areas; Nanhi Kali, which focusses on educational support for underprivileged girls; health with

programmes such as blood donations and ambulance donations and environment with programmes such as

Mahindra Hariyali under which we planted over 100,000 saplings across India. During the Financial Year 2020,

our Company has made significant contributions to the PM Cares Fund to combat the COVID-19 pandemic and

has also extended support to the flood victims in Odisha, Maharashtra and Bihar. Our Company has also

contributed funds towards other causes such as preservation and promotion of the fine arts and culture.

108

HISTORY AND CORPORATE STRUCTURE

Our Company was originally incorporated as “Maxi Motors Financial Services Limited” on January 1, 1991 as a

public limited company under the Companies Act, 1956 and was granted a certificate of incorporation by the RoC.

Thereafter, our Company received its certificate of commencement of business from RoC on January 19, 1991.

Subsequently, the name of our Company was changed to “Mahindra & Mahindra Financial Services Limited”

and a fresh certificate of incorporation consequent upon change of name was granted to our Company by RoC on

November 3, 1992. Our Company is registered as an asset finance - deposit accepting non-banking financial

company with RBI under Section 45-IA of the Reserve Bank of India Act, 1934.

We are currently listed on BSE and NSE.

Changes to the address of our registered office

Except as stated below, there has been no change in the registered office of our Company since incorporation:

Date of change Particulars of change in address

December 31, 1991 From Sharda Chambers, 7th Floor, New Marine Lines, Bombay, 400 020 to Gateway

Building, Apollo Bunder, Bombay, 400 039.

Main objects of our Company

The main objects of our Company as stated in our Memorandum of Association are as follows:

“ 1. To carry on the business of buying, selling, leasing, lease broking, letting on hire, hire purchase or on

easy payment system, motor vehicles, taxi cabs, mopeds, scooters, motor cycles, 3 wheelers,

autorickshaws, automobiles, tractors, commercial vehicles, vans, pickups, earth moving equipments,

material handling equipments, trailers, oil rigs, coaches, garages and all other vehicles drawn by motor,

steam, oil, petroleum, electricity or any mechanical or other power or device, agricultural implements

and machinery, airships, aeroplanes and helicopters, tools, plants, implements, utensils, apparatus and

requisites and accessories, household and office furnitures, wireless and television receivers, telephones,

telex, tele printers, computers, tabulators, addressing machines and other sophisticated office machinery

or other apparatus, ships, dredgers, barges and containers and to carry on the business of hire purchase

of moveable properties of any kind including machinery, plant of all kinds, to buy, sell, alter, repair,

exchange and deal in and finance the sale of furniture, apparatus, machinery, materials, goods, and

articles, to hire out or sell any of the same on hire purchase system and to lease or otherwise deal with

them in any manner whatsoever including resale thereof regardless of whether the property purchased

and leased be new and/or used, from India or from any part of the world.

1a. To carry on mutual fund activities in India or abroad, acting as a sponsor to a Mutual Fund, incorporating

or causing the incorporation of and/or acquiring and holding shares in an asset management company

and/or trustee company to a mutual fund and to engage in such other activities relating to the Mutual

Fund business as permitted under the applicable laws, to set-up, create, issue, float, promote and manage

assets, trusts or funds including mutual funds, growth funds, investment funds, income or capital funds,

taxable or tax exempt funds, charitable funds, venture funds, risk funds, real estate funds, education funds,

on shore funds, off shore funds, consortium funds, or organise or manage funds or investments on a

discretionary or non-discretionary basis on behalf of any person or persons (whether individual, firms,

companies, bodies corporate, public body or authority, supreme, local or otherwise, trusts, pension funds,

charities, other associations or other entities), whether in the private or public sector and to act as

administrators, managers, portfolio managers; or trustees of funds and trusts, brokers, managers or

agents to the issue, registrar to the issue, underwriters to the issue, financial advisors, trusteeship services,

and wealth advisory services.”

The main objects as contained in our Memorandum of Association enable our Company to carry on our existing

businesses.

109

Major events and milestones

Some of the key events in the evolution process of our Company are as follows:

Fiscal Particulars

1999 Registration of our Company as a deposit-taking non-banking financial company

2004 Commencement of our insurance broking business through our subsidiary, Mahindra Insurance Brokers

Limited

2008 Incorporated Mahindra Finance USA LLC, an associate of our Company, with De Lage Landen Financial

Services Inc., for tractor financing in USA

2008 Commencement of our rural housing finance business through our Material Subsidiary, Mahindra Rural

Housing Finance Limited

2010 Crossed one million cumulative customer contracts

2011 Completed a ‘Qualified Institutions Placement’, aggregating to ₹ 4,262.58 million

2013 Completed a ‘Qualified Institutions Placement’, aggregating to ₹ 8,667.98 million

2013 Completion of the investment by Inclusion Resources Private Limited amounting to 15% of the equity

share capital of Mahindra Insurance Brokers Limited

2014 Incorporation of Mahindra Manulife Investment Management Private Limited (formerly known as

Mahindra Asset Management Company Private Limited) and Mahindra Manulife Trustee Private Limited

(formerly known as Mahindra Trustee Company Private Limited) for the mutual fund business of our

Company

2016 Commencement of the mutual fund business registered as Mahindra Manulife Mutual Fund

2017 Completed the first public issue of Non-Convertible debentures. aggregating to ₹ 10,000.00 million

2018 Completed a preferential allotment of equity shares to our Promoter, aggregating to ₹10,550.00 million

2018 Completion of stake sale of 5% equity share capital in Mahindra Insurance Brokers Limited to Inclusion

Resources Private Limited

2018 Completed a ‘Qualified Institutions Placement’, aggregating to ₹10,560.00 million

2019 Crossed six million cumulative customer contracts

2020 Incorporated our wholly-owned subsidiary, Mahindra Finance CSR Foundation

2020 Invested 38.20% in Ideal Finance Limited (Sri Lanka) for providing financial services in Sri Lanka*

2021 Partnered with Manulife for their 49% investment in Mahindra Manulife Investment Management Private

Limited (formerly known as Mahindra Asset Management Company Private Limited) and Mahindra

Manulife Trustee Private Limited (formerly known as Mahindra Trustee Company Private Limited) *Our Company has entered in to a share subscription, share purchase and shareholders' agreement dated August 20, 2019

(“Agreement”) with Ideal Finance Limited (“Ideal Finance”) and its existing shareholders to form and operate a joint venture

in Sri Lanka. Pursuant to the Agreement, the Company has agreed to subscribe / acquire up to 58.26% of the equity share capital

of Ideal Finance Limited, in one or more tranches. As on date of this Letter of Offer, the Company has acquired 38.20% of the

equity share capital of Ideal Finance, and upon acquisition of entire 58.26% equity shareholding of Ideal Finance, it will become

a subsidiary of our Company.

110

Corporate Structure

As on date, our Company has five Subsidiaries, one Associate and one Joint Venture (as per the Companies Act,

2013).

*Our Company has entered into the Agreement with Ideal Finance and its existing shareholders to form and operate a joint venture in Sri Lanka. Pursuant to the

Agreement, the Company has agreed to subscribe / acquire up to 58.26% of the equity share capital of Ideal Finance, in one or more tranches. As on date of this Letter

of Offer, the Company has acquired 38.20% of the equity share capital of Ideal Finance, and upon acquisition of entire 58.26% equity shareholding of Ideal Finance, it will become a subsidiary of our Company.

Public

48.40%

Mahindra

Rural

Housing

Finance

Limited

98.43%

Mahindra

Manulife

Trustee Private

Limited

51.00%

Mahindra

Insurance

Brokers

Limited

80.00%

Mahindra

Finance USA,

LLC

49.00%

Mahindra

Finance CSR

Foundation

100%

Shares held by ESOP

Trust

0.39%

Ideal Finance

Limited*

38.20%

Mahindra

Manulife

Investment

Management

Private Limited

51.00%

Promoter & Promoter

Group

51.19%

Mahindra & Mahindra Financial Services

Limited

111

OUR MANAGEMENT

Our Board of Directors

In terms of the Companies Act, 2013, read with the Articles of Association, the number of Directors on our Board

shall be not less than three and not more than 15, unless otherwise determined by our Company in a general

meeting. The composition of the Board and the various committees of the Board are in conformity with the

Companies Act, 2013 and the SEBI Listing Regulations. As of the date of this Letter of Offer, our Board of

Directors comprises of nine Directors including two Executive Directors, two Non-Executive and Non-

Independent Directors and five Independent Directors (including one woman Independent Director). Our

Chairman is an Independent Director.

Pursuant to the provisions of the Companies Act, 2013, at least two-thirds of the total number of Directors,

(excluding the Independent Directors), are liable to retire by rotation, with one-third of such number, retiring at

each annual general meeting. A retiring director is eligible for re-appointment. Further, an Independent Director

may be appointed for a maximum of two consecutive terms of up to five years each.

The following table sets forth details regarding our Board of Directors as of the date of this Letter of Offer:

Sr. No.

Name, designation, date of birth, term,

period of directorship, DIN, occupation and

address

Age

(in years) Other directorships

1. Dhananjay Mungale

Designation: Chairman and Independent

Director

Date of birth: June 1, 1953

Term: Five years with effect from July 24,

2019, i.e until July 23, 2024

Period of directorship: Since March 1, 1999

and appointed as Chairman since March 18,

2016

DIN: 00007563

Occupation: Professional

Address: A-10, Ameya Apartments, Near Kirti

College, Dadar West, Mumbai, 400 028,

Maharashtra

67 Indian Companies:

• DSP Investment Managers Private Limited;

• DSP Pension Fund Managers Private

Limited;

• I-Nestor Advisors Private Limited;

• Kalpataru Limited;

• LICHFL Trustee Company Private Limited;

• Mahindra CIE Automotive Limited;

• Mentor Technologies Private Limited;

• NOCIL Limited;

• Samson Maritime Limited; and

• Tamilnadu Petroproducts Limited.

2. Ramesh Iyer

Designation: Vice-Chairman and Managing

Director

Date of birth: June 4, 1958

Term: Five years with effect from April 30,

2016, i.e until April 29, 2021

Period of directorship: Since April 30, 2001

DIN: 00220759

Occupation: Service

Address: D-1502, Milano Tower, Lodha

Fiorenza, Western Express Highway, near Hub

Mall, Goregaon East, Mumbai, 400 063,

Maharashtra


• Finance Industry Development Council;

• Mahindra Agri Solutions Limited;

• Mahindra First Choice Services Limited;

• Mahindra First Choice Wheels Limited;

• Mahindra Insurance Brokers Limited;

• Mahindra Rural Housing Finance Limited;

• Mahindra Susten Private Limited;

• NBS International Limited; and

• Noveltech Feeds Private Limited.

3. V. Ravi


112

Sr. No.



address

Age


Designation: Executive Director and Chief

Financial Officer

Date of birth: July 2, 1959


2015, i.e until July 24, 2020#

Period of directorship: Since July 25, 2015

DIN: 00307328

Occupation: Service

Address: A-4, Plot No. NA-52, New Samrat

Society, Andheri Kurla Road, Opp. Vishal

Hall, Andheri (East), Mumbai, 400 069,

Maharashtra

• Mahindra Manulife Investment

Management Private Limited;

• Mahindra Insurance Brokers Limited; and

• Mahindra Rural Housing Finance Limited.

4. V.S. Parthasarathy

Designation: Non-Executive and Non-


Date of birth: November 1, 1962

Term: Liable to retire by rotation

Period of directorship: Since July 24, 2014

DIN: 00125299

Occupation: Service

Address: 3404, Indiabulls Sky, Senapati Bapat

Marg, Elphinstone West, Elphinstone Road,

Delisle Road, Mumbai, 400 013, Maharashtra


• Bombay Chambers of Commerce and

Industry;

• Fifth Gear Ventures Limited;

• Mahindra Electric Mobility Limited;

• Mahindra First Choice Services Limited;

• Mahindra First Choice Wheels Limited;

• Mahindra Holidays & Resorts India

Limited;

• Mahindra Logistics Limited;

• Meru Travel Solutions Private Limited;

• Smartshift Logistics Solutions Private

Limited; and

• Tech Mahindra Limited.

5. Anish Shah

Designation: Non-Executive and Non-


Date of birth: December 26, 1969

Term: Liable to retire by rotation

Period of directorship: Since March 18, 2016

DIN: 02719429

Occupation: Service

Address:. D-3603 Vivarea, Sane Guruji Marg,

Mahalakshmi, Jacob Circle, Mumbai, 400 011,

Maharashtra.


• Mahindra Holidays & Resorts India

Limited;

• Mahindra Lifespace Developers Limited;

• Mahindra Trucks & Buses Limited;

• Mahindra & Mahindra Limited;

• New Democratic Electoral Trust; and

• Tech Mahindra Limited.

6. Chandrashekhar Bhaskar Bhave

Designation: Independent Director

Date of birth: August 28, 1950

Term: Five years with effect from February 3,

2020, i.e. until February 2, 2025


• Avenue Supermarts Limited;

• Indian Institute for Human Settlements;

• Max Bupa Health Insurance Company

Limited;

• Tejas Networks Limited; and

• Vistaar Financial Services Private Limited.

113

Sr. No.



address

Age


Period of directorship: Since February 3, 2015

DIN: 00059856

Occupation: Self Employed

Address: 64, Tower 4, Pebble Bay,1st Main,

Dollars Colony, RMV 2nd Stage, Bengaluru

North, R.M.V. Extension II Stage, Bengaluru,

560 094, Karnataka.

7. Rama Bijapurkar


Date of birth: March 12, 1957


2019, i.e until July 23, 2024

Period of directorship: Since June 14, 2008

DIN: 00001835

Occupation: Independent Management

Consultant

Address: 8 CD, Mona Apartments, 46F,

Bhulabhai Desai Road, Near Mahalaxmi

Temple, Cumballa Hill, Mumbai, 400 026,

Maharashtra.


• Cummins India Limited;

• Emami Limited;

• ICICI Bank Limited;

• Nestle India Limited;

• People Research on India's Consumer

Economy; and

• VST Industries Limited.

8. Arvind Sonde


Date of birth: August 7, 1955

Term: Five years with effect from December

9, 2019, i.e until December 8, 2024

Period of directorship: Since December 9,

2019

DIN: 00053834

Occupation: Advocate

Address: 1802/B, 18th Floor, Vivarea, Sane

Guruji Marg, Saat Rasta, Jacob Circle,

Mahalaxmi, Mumbai, 400 011, Maharashtra.


• Franklin Templeton Trustee Services

Private Limited.

9. Milind Sarwate


Date of birth: September 23, 1959

Term: Five years with effect from April

1,2019, i.e until March 31, 2024

Period of directorship: Since April 1, 2019

DIN: 00109854

Occupation: Corporate Advisor


• Eternis Fine Chemicals Limited;

• Glenmark Pharmaceuticals Limited;

• Halite Personal Care India Private Limited*;

• Increate Foundation;

• Hexaware Technologies Limited**;

• Matrimony.com Limited;

• Metropolis Healthcare Limited;

• Omniactive Health Technologies Limited;

and

• WheelsEMI Private Limited.

114

Sr. No.



address

Age


Address: E-201/202, Sita Vihar, Near Damani

Estate, LBS Marg, Near Hotel Shubha Naupada,

Thane (West), 400 602, Maharashtra. * Under liquidation * *The Board of Directors of Hexaware Technologies Limited, in their meeting held on June 20, 2020, have approved a voluntary delisting of

the Company and a postal ballot notice has been sent to the shareholders for their approval, the results of which will be announced on or

before August 10, 2020. # V. Ravi is currently the Executive Director and Chief Financial Officer of our Company and will cease to hold this position with effect from

July 25, 2020. Our Board of Directors, on July 18, 2020, has appointed Vivek Karve as the Chief Financial Officer of our Company with effect from September 14, 2020.

Family relationship between our Directors

There is no family relationship between any of our Directors.

Confirmations

1. None of our Directors is or was a director of any listed company during the last five years immediately

preceding the date of this Letter of Offer, whose shares have been or were suspended from being traded on

any stock exchange, during the term of their directorship in such company.

2. None of our Directors is or was a director of any listed company which has been or was delisted from the

stock exchanges, during the term of their directorship in such company, in the last 10 years immediately

preceding the date of filing of this Letter of Offer.

Service contracts with our Directors for benefits upon termination

No service contracts have been entered into by any Director with our Company providing for benefits upon their

termination of employment.

Arrangement or understanding with major shareholders, customers, suppliers or others

There are no arrangements or understanding with major Shareholders, customers, suppliers or others, pursuant

to which our Company has appointed a Director.

115

SECTION V: FINANCIAL INFORMATION

FINANCIAL STATEMENTS

Sr. No. Particulars Page Nos.

1. The auditors’ report and the audited standalone financial statements as at and for the

year ended March 31, 2020.

116-218

2. The auditors’ report and the audited consolidated financial statements as at and for the

year ended March 31, 2020.

219-312

3. The auditors’ reports and the limited review unaudited consolidated and standalone

financial results of our Company for the three months period ended June 30, 2020.

313-321

[The remainder of this page has been intentionally left blank]

B S R & Co. LLP Chartered Accountants

5th Floor, Lodha Excelus, Telephone +91 (22) 4345 5300 Apollo Mills Compound N. M. Joshi Marg, Mahalaxmi Mumbai - 400 011India

Fax +91 (22) 4345 5399

Independent Auditors’ Report To the Members of Mahindra & Mahindra Financial Services Limited Report on the Audit of the Standalone Financial Statements Opinion We have audited the standalone financial statements of Mahindra & Mahindra Financial Services Limited (“the Company”), which comprise the standalone balance sheet as at 31 March 2020, and the standalone statement of profit and loss (including other comprehensive income), standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the Standalone Financial Statements”). In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (the “Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2020, and profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date. Basis for Opinion We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter As described in Note 50.2 (i) to the standalone financial statements, in respect of accounts overdue but standard at 29 February 2020 where moratorium benefit has been granted, the staging of those accounts as on 31 March 2020 is based on the days past due status as on 29 February 2020 in accordance with the Reserve Bank of India COVID-19 Regulatory Package. Further, as described in Note 50.2 (ii) to the standalone financial statements, the extent to which the COVID-19 pandemic will impact the Company’s financial performance is dependent on future developments, which are highly uncertain. Our opinion is not modified in respect of the above matters.

B S R & Co (a partnership firm with Registration No. BA61223) converted into B S R & Co. LLP (a Limited Liability, Partnership with LLP Registration No. AAB-8181) with effect from October 14, 2013

Registered Office: 5th Floor, Lodha Excelus Apollo Mills Compound N. M. Joshi Marg, Mahalaxmi Mumbai - 400 011 .India

116

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current year. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Description of Key Audit Matter

Impairment Loss Allowance Refer notes 2.11 (h) and 50.2 to the Standalone Financial Statements The key audit matter How the matter was addressed in our audit The Company has recognized impairment loss allowance of Rs. 308,948.66 lakhs as at 31 March 2020 and has recognized an expense for Rs.121,710.59 lakhs in its statement of profit and loss. The determination of impairment loss allowance is inherently judgmental and relies on managements’ best estimate due to the following: Increased level of data inputs for capturing the historical

data to calculate the Probability of Default (‘PDs’) and Loss Given Default (“LGD”) and the completeness and accuracy of that data

Use of management overlays for considering the probability weighted scenarios, the forward looking macro-economic factors, economic environment and the timing of cash flows

Criteria selected to identify significant increase in credit risk, particularly in respect of moratorium benefit given to eligible borrowers, as per the Company’s board approved policy, read with the RBI COVID 19 regulatory package.

In relation to COVID-19 pandemic, judgements and assumptions include the extent and duration of the pandemic, the impacts of actions of governments and other authorities, and the responses of businesses and consumers in different industries, along with the associated impact on the global economy

The underlying forecasts and assumptions used in the estimates of impairment loss allowance are subject to uncertainties which are often outside the control of the Company. The extent to which the COVID-19 pandemic will impact the Company’s current estimate of impairment loss allowances is dependent on future developments, which are highly uncertain at this point. Given the size of loan portfolio relative to the balance sheet and the impact of impairment allowance on the financial statements, we have considered this as a key audit matter.

We performed the following key audit procedures: Performed process walkthroughs to identify the key

systems, applications and controls used in the impairment allowance processes.

Assessed the design and implementation of controls in respect of the Company’s impairment allowance process such as the timely recognition of impairment loss, the completeness and accuracy of reports used in the impairment allowance process and management review processes over the calculation of impairment allowance and the related disclosures on credit risk management.

Obtained understanding of management’s revised processes, systems and controls implemented in relation to impairment allowance process, particularly in view of staging freeze as on 29 February 2020 as per board approved policy read with RBI COVID-19 regulatory package

Tested the relevant general IT and applications controls over key systems used in the impairment allowance processes.

Evaluated whether the methodology applied by the Company is compliant with the requirements of the relevant accounting standards and confirmed that the calculations are performed in accordance with the approved methodology, including checking mathematical accuracy of the workings.

Tested the periods considered for capturing underlying data as base to PD and LGD calculations are in line with Company’s recent experience of past observed periods.

Tested the accuracy of the key inputs used in the calculation and independently evaluated the reasonableness of the assumptions made.

Challenged completeness and validity of management overlays, particularly in response to COVID 19 with assistance of our financial risk modelling experts by critically evaluating the risks that have been addressed by management through overlays and also considering whether there are other risks not captured which require additional overlays. We also tested management’s workings supporting the overlay quantum.

Assessed whether the disclosures on key judgements, assumptions and quantitative data with respect to impairment loss allowance in the financial statements are appropriate and sufficient.

117

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Other Information The Company’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company’s annual report, but does not include the financial statements and our auditors’ report thereon. Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Management's Responsibility for the Standalone Financial Statements The Company’s management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the state of affairs, profit and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the Standalone Financial Statements, management and Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Board of Directors is also responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Standalone Financial Statements Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

118

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Auditor’s Responsibilities for the Audit of the Standalone Financial Statements (Continued) As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Standalone Financial Statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

119

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Report on Other Legal and Regulatory Requirements As required by the Companies (Auditors’ Report) Order, 2016 (“the Order”) issued by the Central Government in terms of section 143 (11) of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(A) As required by Section 143(3) of the Act, we report that: a) We have sought and obtained all the information and explanations which to the best

of our knowledge and belief were necessary for the purposes of our audit; b) In our opinion, proper books of account as required by law have been kept by the

Company so far as it appears from our examination of those books; c) The standalone balance sheet, the standalone statement of profit and loss (including

other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under section 133 of the Act;

e) On the basis of the written representations received from the directors as on 31 March 2020 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2020 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”.

(B) With respect to the other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations as at 31 March 2020 on

its financial position in its Standalone Financial Statements - Refer Note 44 to the Standalone Financial Statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts- Refer Note 48 to the Standalone Financial Statements;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

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B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Report on Other Legal and Regulatory Requirements (Continued)

(C) With respect to the matter to be included in the Auditors’ Report under section 197(16): In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Venkataramanan Vishwanath Partner

Mumbai Membership No: 113156 15 May 2020 ICAI UDIN: 20113156AAAACM7045

121

B S R & Co. LLP Mahindra & Mahindra Financial Services Limited Annexure A to the Independent Auditor’s Report - 31 March 2020 The Annexure referred to in Independent Auditor’s Report to the members of the Company on the financial statements for the year ended 31 March 2020, we report that: i. (a) The Company has maintained proper records showing full particulars, including

quantitative details and situation of fixed assets. (b) The fixed assets are physically verified by the management according to a

programme of phased verification, which in our opinion is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, the fixed assets have been physically verified by management during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

ii. The Company is in the business of providing Non-Banking Finance Services and consequently, does not hold any inventory. Accordingly, paragraph 3(ii) of the Order is not applicable to the Company.

iii. According to the information and explanations given to us and based on the audit procedures conducted by us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, paragraph 3(iii) of the Order is not applicable to the Company.

iv. According to the information and explanations given to us and based on the audit procedures conducted by us, the provisions of section 185 are not applicable to the Company. The Company has complied with the provisions of section 186 of the Act to the extent applicable.

v. The Company is a Non-Banking Finance Company and consequently is exempt from provisions of section 73, 74, 75 and 76 of the Act. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.

vi. According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any activities conducted/ services rendered by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable to the Company.

vii. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including provident fund, employees' state insurance, income-tax, goods and service tax, cess and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company does not have any dues on account of sales tax, service tax, duty of customs, duty of excise and value added tax. According to the information and explanations given to us and on the basis of our examination of the records of the Company, no undisputed amounts payable in respect of provident fund, employees' state insurance, income-tax, goods and service tax, cess and other material statutory dues were in arrears as at 31 March 2020 for a period of more than six months from the date they become payable.

122

B S R & Co. LLP Mahindra & Mahindra Financial Services Limited Annexure A to the Independent Auditor’s Report - 31 March 2020 (Continued)

(b) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the following dues have not been deposited by the Company on account of any disputes.

Name of the statute Nature of dues Amount (Rs. in lakhs)

Period to which the amount relates

Forum where dispute is pending

The Income Tax Act, 1961

Income Tax 259.58 2002-2003 Commissioner of Income Tax (Appeals)

The Income Tax Act, 1961

Income Tax 7,383.00 2016-2017 Commissioner of Income Tax (Appeals)

Finance Act, 1994 Service Tax 4,039.90 2007-2012 Customs, Excise And Service Tax Appellate Tribunal (CESTAT)

Finance Act, 1994 Service Tax 109.27 2012-13 Customs, Excise And Service Tax Appellate Tribunal (CESTAT)



Andhra Pradesh Value Added Tax

Value Added Tax 123.57 April 2008-October2013

Andhra Pradesh High Court

Madhya Pradesh Value Added Tax

Value Added Tax 0.42 2013-2014 Appellate Authority of Commercial Taxes, Bhopal







Maharashtra Value Added Tax

Value Added Tax 87.32 2010-2011 Appeal filed with Maharashtra Sales Tax Tribunal


Value Added Tax 44.84 2011-2012 Appeal with Deputy Commissioner of Sales Tax (Appeal)


Value Added Tax 102.25 2012-2013 Appeal with Deputy Commissioner of Sales Tax (Appeal)

Kerala Value Added Tax

Value Added Tax 17.03 2013-2014 Appellate Authority of Commercial Taxes, Kerala







123

B S R & Co. LLP Mahindra & Mahindra Financial Services Limited Annexure A to the Independent Auditor’s Report - 31 March 2020 (Continued) viii. According to the information and explanations given to us and based on our examination of

the records, the Company has not defaulted in the repayment of outstanding dues to financial institution, bank, or debenture holder during the year. The Company did not have any borrowings from the government during the year.

ix. According to the information and explanations given to us and based on our examination of the records, the Company has utilised the money raised during the year, by way of terms loans for the purpose for which they were raised. During the year, the Company has not raised moneys by way of initial public offer or further public offer.

x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, except for 80 cases aggregating Rs. 172.89 lakhs which largely pertains to misappropriation of cash, we have neither come across any instance of fraud by the Company or any material instance of fraud on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of such case by management.

xi. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable to the Company.

xiii. According to the information and explanations given to us and on the basis of our examination of the records of the Company, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details of such transactions have been disclosed in the financial statements, as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and based on our examination of the records, the Company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.

xvi. According to the information and explanations given to us, the Company has registered as required, under Section 45-IA of the Reserve Bank of India Act, 1934.



124

B S R & Co. LLP Annexure B to the Independent Auditors’ report on the standalone financial statements of Mahindra & Mahindra Financial Services Limited for the year ended 31 March 2020 Report on the internal financial controls with reference to the aforesaid standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 Referred to in paragraph A(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date Opinion We have audited the internal financial controls with reference to financial statements of Mahindra & Mahindra Financial Services Limited (“the Company”) as of 31 March 2020 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date. In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements and such internal financial controls were operating effectively as at 31 March 2020, based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the “Guidance Note”). Management’s Responsibility for Internal Financial Controls The Company’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (hereinafter referred to as “the Act”). Auditors’ Responsibility Our responsibility is to express an opinion on the Company's internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of such internal financial controls, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls with reference to financial statements.

125

B S R & Co. LLP Annexure B to the Independent Auditors’ report on the standalone financial statements of Mahindra & Mahindra Financial Services Limited for the year ended 31 March 2020 (Continued) Meaning of Internal Financial controls with Reference to Financial Statements A company's internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial controls with reference to financial statements include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial controls with Reference to Financial Statements Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



126

as at 31 March 2020

Particulars Note As at 31 March 2020

As at 31 March 2019

ASSETSFinancial Assets

a) Cash and cash equivalents 3 67,679.04 50,167.74 b) Bank balance other than (a) above 4 74,899.44 45,681.43 c) Derivative financial instruments 5 9,292.76 1,006.39 d) Receivables

i) Trade receivables 6 858.71 519.19 ii) Other receivables - -

e) Loans 7 6,499,347.04 6,124,962.80 f) Investments 8 591,096.62 379,170.37 g) Other financial assets 9 47,665.27 16,895.13

7,290,838.88 6,618,403.05 Non-financial Assets

a) Current tax assets (Net) 23,995.98 30,210.00 b) Deferred tax assets (Net) 10 (i) 48,962.66 37,172.53 c) Property, plant and equipment 11 33,794.74 13,250.02 d) Intangible assets 12 2,555.33 3,056.15 e) Other non-financial assets 13 6,973.68 5,706.83

116,282.39 89,395.53 7,407,121.27 6,707,798.58

LIABILITIES AND EQUITYLIABILITIESFinancial Liabilities

a) Derivative financial instruments 14 4,016.06 7,702.53 b) Payables 15

I) Trade payables - -

60,633.42 97,947.17 II) Other payables

17.40 253.29 2,923.97 3,164.54

c) Debt securities 16 1,774,487.73 2,231,937.92 d) Borrowings (Other than debt securities) 17 2,948,734.27 2,130,153.03 e) Deposits 18 881,213.98 566,718.41 f) Subordinated liabilities 19 341,794.57 355,883.82 g) Other financial liabilities 20 231,396.03 192,662.95

6,245,217.43 5,586,423.66 Non-Financial Liabilities

a) Current tax liabilities (net) 1,392.09 1,392.09 b) Provisions 21 14,322.83 20,652.70 c) Other non-financial liabilities 22 9,803.43 8,527.84

25,518.35 30,572.63 EQUITY 23

a) Equity share capital 12,306.95 12,297.54 b) Other equity 1,124,078.54 1,078,504.75

1,136,385.49 1,090,802.29 7,407,121.27 6,707,798.58

1 to 57

Venkataramanan Vishwanath

Mumbai15 May 2020

Mahindra & Mahindra Financial Services LimitedBalance Sheet

Rs. in lakhs

The accompanying notes form an integral part of the financial statements.

Total Assets

i) total outstanding dues of micro enterprises and small enterprises ii) total outstanding dues of creditors other than micro enterprises and small enterprises i) total outstanding dues of micro enterprises and small enterprises ii) total outstanding dues of creditors other than micro enterprises and small enterprises

Total Liabilities and Equity

As per our report of even date attached.

PartnerMembership No: 113156

Mumbai15 May 2020

For B S R & Co. LLPChartered AccountantsFirm's Registration No: 101248W/W-100022

For and on behalf of the Board of DirectorsMahindra & Mahindra Financial Services Limited

Dhananjay MungaleChairman[DIN: 00007563]

Ramesh IyerVice-Chairman & Managing Director

[DIN: 00220759]

V. RaviExecutive Director & Chief Financial Officer[DIN: 00307328]

Arnavaz PardiwallaCompany Secretary

127

for year ended 31 March 2020

Particulars Note Year ended31 March 2020

Year ended31 March 2019

Revenue from operationsi) Interest income 24 994,171.19 861,455.78 ii) Dividend income 2,425.09 1,388.00 iii) Rental income 874.93 71.45 iv) Fees and commission Income 25 9,698.85 8,691.76 v) Net gain on fair value changes 26 2,615.10 683.87

I Total revenue from operations 1,009,785.16 872,290.86 II Other income 27 14,728.63 8,690.31 III Total income (I+II) 1,024,513.79 880,981.17

Expensesi) Finance costs 28 482,874.89 394,456.16 ii) Fees and commission expense 4,094.21 3,047.83 iii) Impairment on financial instruments 29 205,447.07 63,520.83 iv) Employee benefits expenses 30 114,844.51 109,011.91 v) Depreciation, amortization and impairment 31 11,829.36 6,022.52 vi) Others expenses 32 71,047.51 66,677.73

IV Total expenses (IV) 890,137.55 642,736.98 V Profit before tax (III-IV) 134,376.24 238,244.19 VI Tax expense : 10 (ii)

(i) Current tax 55,693.89 57,411.73 (ii) Deferred tax (11,958.04) 24,851.72 (iii) (Excess) / Short Provision for Income Tax - earlier years - 274.39

43,735.85 82,537.84 VII Profit for the year (V-VI) 90,640.39 155,706.35 VIII Other Comprehensive Income (OCI)

(1,134.18) (1,324.60) 268.65 454.65

10 (iii) (51.94) 304.00 Subtotal (A) (917.47) (565.95)

767.09 788.52 10 (iii) (115.97) (275.54)

Subtotal (B) 651.12 512.98 Other Comprehensive Income (A+B) (266.35) (52.97)

IX 90,374.04 155,653.38 X Earnings per equity share (face value Rs. 2/- per equity share) 33

Basic (Rupees) 14.74 25.33 Diluted (Rupees) 14.71 25.28

1 to 57


Mumbai15 May 2020

Firm's Registration No:101248W/W-100022

V. Ravi


As per our report of even date attached.For B S R & Co. LLPChartered Accountants




[DIN: 00220759]

Executive Director & Chief Financial Officer[DIN: 00307328]


(A) (i) Items that will not be reclassified to profit or loss

Mahindra & Mahindra Financial Services LimitedStatement of Profit and Loss

Rs. in lakhs

- Remeasurement gain / (loss) on defined benefit plans - Net gain / (loss) on equity instruments through OCI (ii) Income tax impact thereon(B) (i) Items that will be reclassified to profit or loss - Net gain / (loss) on debt instruments through OCI (ii) Income tax impact thereon

Total Comprehensive Income for the year (VII+VIII)

The accompanying notes form an integral part of the financial statements.

Mumbai15 May 2020

128

Statement of Changes in Equityfor year ended 31 March 2020

STATEMENT OF CHANGES IN EQUITY A. Equity share capital

Rs. in lakhsParticulars Amount Issued, Subscribed and fully paid up: Balance as at 1 April 2018 12,289.54 Changes during the year: Less : Allotment of shares by ESOS Trust to employees 8.00 Balance as at 31 March 2019 12,297.54 Balance as at 1 April 2019 12,297.54 Changes during the year: Less : Allotment of shares by ESOS Trust to employees 9.41 Balance as at 31 March 2020 12,306.95

B. Other EquityRs. in lakhs

ParticularsStatutory

reserves as per Section 45-IC of the

RBI Act, 1934

Capital redemption reserves

Securities premiumreserve

General reserves Debenture Redemption

Reserves (DRR)Employee stock

options outstandingRetained earnings

Balance as at 1 April 2018 137,463.62 5,000.00 414,146.15 64,142.78 7,702.98 2,129.85 319,316.44 - - 949,901.82 Profit/(loss) for the year 155,706.35 155,706.35 Other Comprehensive Income / (loss) (861.73) 512.98 295.78 (52.97) Total Comprehensive Income for the year - - - - - - 154,844.62 512.98 295.78 155,653.38 Dividend paid on equity shares (including tax thereon) (29,378.43) (29,378.43) Transfers to Securities premium on exercise of employee stock options 1,066.44 (1,066.44) - Employee stock options expired 4.91 (4.91) - Share based payment expense 2,327.98 2,327.98 Transfers to Statutory reserves 31,142.00 (31,142.00) - Transfers to General reserves 15,571.00 (15,571.00) - Transfers to Debenture Redemption Reserve 14,667.61 (14,667.61) - Balance as at 31 March 2019 168,605.62 5,000.00 415,212.59 79,718.69 22,370.59 3,386.48 383,402.02 512.98 295.78 1,078,504.75

Total


Rs. in lakhs

Reserves and Surplus Debt instruments through OCI

(Refer note 34)

Equity instruments through OCI

(Refer note 34)

129

Statement of Changes in Equity (Continued)for year ended 31 March 2020

STATEMENT OF CHANGES IN EQUITY

B. Other Equity (Continued)Rs. in lakhs

ParticularsStatutory

reserves as per Section 45-IC of the

RBI Act, 1934

Capital redemption reserves

Securities premiumreserve

General reserves Debenture Redemption

Reserves (DRR)Employee stock

options outstandingRetained earnings

Balance as at 1 April 2019 168,605.62 5,000.00 415,212.59 79,718.69 22,370.59 3,386.48 383,402.02 512.98 295.78 1,078,504.75 Profit/(loss) for the year 90,640.39 90,640.39 Other Comprehensive Income / (loss) (1,134.18) 651.12 216.71 (266.35) Total Comprehensive Income for the year - - - - - - 89,506.21 651.12 216.71 90,374.04 Dividend paid on equity shares (including tax thereon) (47,786.03) (47,786.03) Transfers to Securities premium on exercise of employee stock options 1,462.56 (1,462.56) - Employee stock options expired 7.54 (7.54) - Share based payment expense 2,947.16 - 2,947.16 Transfers to Statutory reserves 18,129.00 (18,129.00) - Transfers from Debenture Redemption Reserve (refer note no. 23) (22,370.59) 22,370.59 - Others 38.62 - - 38.62 Balance as at 31 March 2020 186,734.62 5,000.00 416,713.77 79,726.23 - 4,863.54 429,363.79 1,164.10 512.49 1,124,078.54

Mumbai15 May 2020 15 May 2020

Venkataramanan VishwanathPartnerMembership No: 113156


[DIN: 00220759]Dhananjay MungaleChairman[DIN: 00007563]

V. Ravi Arnavaz PardiwallaExecutive Director & Chief Financial Officer[DIN: 00307328]

Mumbai

Company Secretary


Total

For and on behalf of the Board of DirectorsChartered AccountantsFirm's Registration No:101248W/W-100022

As per our report of even date attached.For B S R & Co. LLP


Rs. in lakhs

The accompanying notes 1 to 57 form an integral part of the financial statements.

Reserves and Surplus Debt instruments through OCI

(Refer note 34)


(Refer note 34)

130

Statement of cash flowsfor year ended 31 March 2020

Particulars Year ended31 March 2020


A) CASH FLOW FROM OPERATING ACTIVITIES134,376.24 238,244.19

Add: Non-cash expenses11,829.36 6,022.52

121,710.59 (112,855.87) 83,736.48 176,376.70

Net loss in fair value of derivative financial instruments (11,972.85) 2,693.63 Unrealized foreign exchange gain/loss 19,173.16 826.29

2,941.80 2,255.02 227,418.54 75,318.29

(2,615.10) (683.87) (9,952.86) (16,020.84) (5,462.70) (3,395.23)

(70.09) (80.41) (4,574.05) 119.90

(22,674.80) (20,060.45) Operating profit before working capital changes 339,119.98 293,502.03 Changes in -

(580,090.49) (1,335,626.42) (391.74) (149.72)

(3,666.73) 304.50 2,465.60 (1,890.66)

20,727.73 15,440.38 (27.20) (1,566.77)

(37,790.21) (4,173.96) 1,314.21 1,999.35

- 1,427.60 (7,298.97) 6,566.45

Cash used in operations (604,757.80) (1,317,669.25) (49,479.87) (67,640.99)

(315,117.69) (1,091,808.21) B) CASH FLOW FROM INVESTING ACTIVITIES

(10,535.45) (10,957.65) 185.26 190.11

(27,127.15) (21,994.94) 39,219.30 106,385.59

(24,389.29) (300.00) (7,284,711.98) (3,466,857.18) 7,131,531.36 3,299,938.37

(38,077.27) (19,963.21) (58,042.63) (37,463.96)

5,462.70 3,395.23 9,192.71 15,955.03

21.12 (12.54) (257,271.32) (131,685.15)

Purchase of Property, plant and equipment and intangible assets

Proceeds from sale of investments at amortized cost

Interest income received on investments measured at amortized cost, FVOCI, FVTPL and at cost

Adjustments to reconcile profit before tax to net cash flows:

Share based payments to employees

Net gain on fair value changes

Rs. in lakhs


Proceeds from sale of investments at FVTPLPurchase of investments at cost

Provisions

Other financial liabilities

LoansTrade receivablesInterest accrued on other depositsOther financial assets

Purchase of investments at FVOCI

Income taxes paid (net of refunds)

Proceeds from sale of Property, plant and equipment

Change in Earmarked balances with banks

Proceeds from term deposits with banks (net)

Profit before exceptional items and taxes

Depreciation, amortization and impairmentImpairment on financial instrumentsBad debts and write offs

Less: Income considered separatelyIncome from investing activitiesDividend incomeNet gain on derecognition of property, plant and equipmentNet gain on sale of investments

NET CASH USED IN OPERATING ACTIVITIES (A)

Purchase of investments at amortized cost

NET CASH GENERATED FROM / (USED IN) INVESTING ACTIVITIES (B)

Purchase of investments at FVTPL

Dividend income received

Other non-financial assetsTrade PayablesOther non-financial liabilitiesDerivative financial instruments

131

Statement of cash flows (Continued)for year ended 31 March 2020



C) CASH FLOW FROM FINANCING ACTIVITIES- (2,143.51)

1,280,780.00 3,155,102.24 (1,736,931.40) (2,954,672.60) 2,766,793.81 2,897,062.34

(1,946,390.36) (2,106,151.64) - 33,687.23

(13,976.88) (980.00) (22,600.50) (2,205.46) 313,823.92 256,150.55

(3,812.25) - (47,786.03) (29,378.43) 589,900.31 1,246,470.72

17,511.30 22,977.36 50,167.74 27,190.38 67,679.04 50,167.74

1,430.30 2,717.34 300.91 1,601.77

45,947.83 45,848.63 20,000.00 -

Total 67,679.04 50,167.74 Notes :


For B S R & Co. LLPChartered AccountantsFirm's Registration No:101248W/W-100022

Payments for principal portion of lease liability

As per our report of even date attached.


CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

- Balances with banks in current accounts

For and on behalf of the Board of Directors

-Term deposits with original maturity up to 3 months

Cash and cash equivalents at the end of the year

NET CASH GENERATED FROM / (USED IN) FINANCING ACTIVITIES (C)NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C)

Dividend paid (including tax on dividend)

Repayment of borrowings through Debt Securities

Proceeds from borrowings through Subordinated Liabilities

Expenses incurred on issuance of Non-convertible debenturesProceeds from borrowings through Debt SecuritiesProceeds from Borrowings (Other than Debt Securities)Repayment of Borrowings (Other than Debt Securities)


Rs. in lakhs

Repayment of borrowings through Subordinated Liabilities

- Cash on hand - Cheques and drafts on hand

Components of Cash and Cash Equivalents

Cash and Cash Equivalents at the beginning of the year

The above Statement of Cash Flow has been prepared under the 'Indirect method' as set out in Ind AS 7 on 'Statement of Cash Flows'.

Mumbai15 May 2020

Mumbai15 May 2020


V. Ravi



[DIN: 00220759]

Arnavaz PardiwallaCompany SecretaryExecutive Director & Chief Financial Officer

[DIN: 00307328]

(Decrease) / Increase in loans repayable on demand and cash credit/overdraft facilities with banks (net)Increase / (decrease) in Fixed deposits (net)

132

Notes forming part of the Financial Statementsfor the year ended 31 March 2020

1

22.1

2.2

2.3

2.4

2.5

Following are areas that involved a higher degree of estimate and judgement or complexity in determining the carrying amount of some assets and liabilities.

Effective Interest Rate (EIR) MethodThe Company recognizes interest income / expense using a rate of return that represents the best estimate of a constant rate of return over the expected life ofthe loans given / taken. This estimation, by nature, requires an element of judgement regarding the expected behaviour and life-cycle of the instruments, aswell as expected changes to other fee income/expense that are integral parts of the instrument.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing amaterial adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptionsand estimates on parameters available when the financial statements were issued. Existing circumstances and assumptions about future developments,however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in theassumptions when they occur.

Impairment of Financial AssetsThe measurement of impairment losses on loan assets and commitments, requires judgement, in estimating the amount and timing of future cash flows andrecoverability of collateral values while determining the impairment losses and assessing a significant increase in credit risk.


COMPANY INFORMATION

Basis of measurementThe financial statements have been prepared on a historical cost convention and on an accrual basis, except for certain financial instruments which aremeasured at fair values as required by relevant Ind AS.Measurement of fair values

Functional and presentation currencyThese financial statements are presented in Indian Rupees ('INR' or 'Rs.') which is also the Company's functional currency. All amounts are rounded-off to thenearest lakhs, unless otherwise indicated.

Any application guidance/ clarifications/ directions issued by RBI or other regulators are implemented as and when they are issued/ applicable.

Mahindra & Mahindra Financial Services Limited (‘the Company’), incorporated in India, is a public limited company, headquartered in Mumbai. TheCompany is a Non-Banking Financial Company (’NBFC’) engaged in providing asset finance through its pan India branch network. The Company isregistered as a Systemically Important Deposit Accepting NBFC as defined under Section 45-IA of the Reserve Bank of India (’RBI’) Act, 1934 witheffect from 4 September 1998. The equity shares of the Company are listed on the National Stock Exchange ("NSE") and the Bombay Stock Exchange ("BSE")in India. The Company is a subsidiary of Mahindra & Mahindra Limited.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESStatement of compliance and basis for preparation and presentation of financial statements

These standalone or separate financial statements have been approved by the Company's Board of Directors and authorized for issue on 15 May 2020.

Rs. in lakhs

The Company's registered office is at Gateway Building, Apollo Bunder, Mumbai 400001, India.

These standalone or separate financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") as perthe Companies (Indian Accounting Standards) Rules 2015 as amended and notified under section 133 of the Companies Act, 2013 (“the Act”), and inconformity with the accounting principles generally accepted in India and other relevant provisions of the Act. Further, the Company has complied with all thedirections related to Implementation of Indian Accounting Standards prescribed for Non-Banking Financial Companies (NBFCs) in accordance with the RBInotification no. RBI/2019-20/170 DOR NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13 March 2020.

A number of Company's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.The Company has established policies and procedures with respect to the measurement of fair values. Fair values are categorized into different levels in a fairvalue hierarchy based on the inputs used in the valuation techniques as follows: - Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. - Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. - Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Use of estimates and judgements and Estimation uncertainityIn preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the Company’saccounting policies and the reported amounts of assets, liabilities, income, expenses and the disclosures of contingent assets and liabilities. Actual results maydiffer from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

133

Notes forming part of the Financial Statements (Continued)for the year ended 31 March 2020

22.5

2.6a)Revenue recognition :

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that mayhave a financial impact on the Company and that are believed to be reasonable under the circumstances.

- The Company’s criteria for assessing if there has been a significant increase in credit risk- The segmentation of financial assets when their ECL is assessed on a collective basis- Development of ECL model, including the various formulae and the choice of inputs- Selection of forward-looking macroeconomic scenarios and their probability weights, to derive the economic inputs into the ECL model- Management overlay used in circumstances where management judges that the existing inputs, assumptions and model techniques do not capture all the riskfactors relevant to the Company's lending portfolios.

Provisions and other contingent liabilitiesThe reliable measure of the estimates and judgments pertaining to litigations and the regulatory proceedings in the ordinary course of the Company’s business are disclosed as contingent liabilities.


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Use of estimates and judgements and Estimation uncertainity (Continued)

Estimation uncertainty relating to the global health pandemic from COVID-19:The ongoing COVID-19 pandemic has increased the estimation uncertainty in the preparation of these Financial Statements.The estimation uncertainty is associated with: - the extent and duration of the disruption to business arising from the actions by governments, businesses and consumers to contain the spread of the virus; - the extent and duration of the expected economic downturn (and forecasts for key economic factors including GDP, employment and house prices). This includes the disruption to capital markets, deteriorating credit, liquidity concerns, increasing unemployment, declines in consumer discretionary spending, reductions in production because of decreased demand, and other restructuring activities; and

Provision for income tax and deferred tax assets:The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which isexercised while determining the provision for income tax, including the amount expected to be paid / recoverd for uncertain tax positions. A deferred tax assetis recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses canbe utilized. Accordingly, the Company exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period.

Defined Benefit Plans:The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuationinvolves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, futuresalary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is sensitive tochanges in these assumptions. All assumptions are reviewed at each reporting date.

Rs. in lakhs

Impairment of Financial Assets (Continued)The Company’s Expected Credit Loss (ECL) calculation is the output of a complex model with a number of underlying assumptions regarding the choice ofvariable inputs and their interdependencies. Elements of the ECL model that are considered accounting judgements and estimates include:

It has been the Company’s policy to regularly review its model in the context of actual loss experience and adjust when necessary (refer note 50).

The Company has developed various accounting estimates in these Financial Statements based on forecasts of economic conditions which reflect expectationsand assumptions as at 31 March 2020 about future events that the Management believe are reasonable in the circumstances. There is a considerable degree ofjudgement involved in preparing forecasts. The underlying assumptions are also subject to uncertainties which are often outside the control of the Company.Accordingly, actual economic conditions are likely to be different from those forecast since anticipated events frequently do not occur as expected, and theeffect of those differences may significantly impact accounting estimates included in these financial statements.

The calculation of the effective interest rate includes transaction costs and fees that are an integral part of the contract. Transaction costs includeincremental costs that are directly attributable to the acquisition of financial asset.

- the effectiveness of government and central bank measures that have and will be put in place to support businesses and consumers through this disruption and economic downturn.

The impact of the COVID-19 pandemic on each of these accounting estimates is discussed further in the relevant note to these Financial Statements. Theimpact of COVID-19 on the Company's financial statements may differ from that estimated as at the date of approval of these financial statements and theCompany will continue to closely monitor any material changes to future economic conditions (refer note 50).

The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected credit losses, fair valuemeasurement, and recoverable amount assessments of non-financial assets.

Recognition of interest income on loansInterest income is recognized in Statement of profit and loss using the effective interest method for all financial instruments measured at amortized cost,debt instruments measured at FVOCI and debt instruments designated at FVTPL. The ‘effective interest rate’ is the rate that exactly discounts estimatedfuture cash payments or receipts through the expected life of the financial instrument.

134


2


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Rs. in lakhs

2.6a)

b)

c)

d)

e) Dividend and interest income on investments:

2.7

- Dividends are recognized in Statement of profit and loss only when the right to receive payment is established, it is probable that the economic benefitsassociated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.- Interest income from investments is recognized when it is certain that the economic benefits will flow to the Company and the amount of income can bemeasured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Property, Plant and Equipments (PPE)

Additional interest and interest on trade advances, are recognized when they become measurable and when it is not unreasonable to expect their ultimatecollection. Income from bill discounting is recognized over the tenure of the instrument so as to provide a constant periodic rate of return.

Rental Income Income from operating leases is recognized in the Statement of profit and loss on a straight-line basis over the lease term. In certain lease arrangements,variable rental charges are also recognized over and above minimum commitment charges based on usage pattern and make/model of the asset.

Subvention incomeSubvention income received from manufacturer / dealers at the inception of the loan contracts which is directly attributable to individual loan contracts inrespect of vehicles financed is recognized in the Statement of profit and loss using the effective interest method over the tenor of such loan contractsmeasured at amortized cost. In case of subvention income which is subject to confirmation from manufacturer and received later than inception date isrecognized in the Statement of profit and loss using straight line method over the tenor of such loan contracts.

Fee and commission income :Fee based income are recognized when they become measurable and when it is probable to expect their ultimate collection. Commission and brokerage income earned for the services rendered are recognized as and when they are due.

PPE are stated at cost of acquisition (including incidental expenses), less accumulated depreciation and accumulated impairment loss, if any.

Advances paid towards the acquisition of PPE outstanding at each balance sheet date are disclosed separately under other non-financial assets. Capital work inprogress comprises the cost of PPE that are not ready for its intended use at the reporting date.Depreciation on PPE is provided on straight-line basis in accordance with the useful lives specified in Schedule II to the Companies Act, 2013 on a pro-ratabasis.

The estimated useful lives used for computation of depreciation are as follows:

Assets held for sale or disposals are stated at the lower of their net book value and net realizable value.

In accordance with Ind AS 116 - Leases, applicable effective from 1 April 2019, the Right-Of-Use assets (Freehold premises) are initially recognized at costwhich comprises of initial amount of lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initialdirect costs less any lease incentives. These are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-Of-Useassets (Freehold premises) are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of theunderlying asset.

BuildingsComputers and Data processing unitsFurniture and fixturesOffice equipmentsVehiclesVehicles under leaseRight-Of-Use assets (Leasehold premises)

60 years3 to 6 years

10 years5 years

8 years and 10 years8 years

2 to 10 years

The Company calculates interest income by applying the EIR to the gross carrying amount of financial assets other than credit-impaired assets.When a financial asset becomes credit-impaired, the Company calculates interest income by applying the effective interest rate to the net amortized costof the financial asset. If the financial asset cures and is no longer credit-impaired, the Company reverts to calculating interest income on a gross basis.

Revenue recognition : (Continued)Recognition of interest income on loans (Continued)If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk, the adjustment is recorded as a positive ornegative adjustment to the carrying amount of the asset in the balance sheet with an increase or reduction in interest income. The adjustment issubsequently amortized through Interest income in the Statement of profit and loss.

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2.7Assets costing less than Rs.5000/- are fully depreciated in the period of purchase.

2.8

2.9

2.10a)

b)

2.11a)

b)

Amortized cost -

Foreign exchange transactions and translations :Initial recognition

Intangible assets : Intangible assets are stated at cost less accumulated amortization and accumulated impairment loss, if any.Intangible assets comprises of computer software which is amortized over the estimated useful life. The amortization period is lower of license period or 36months which is based on management’s estimates of useful life. Amortization is calculated using the straight line method to write down the cost of intangibleassets over their estimated useful lives.Investments in subsidiaries and associates :Investments in subsidiaries and associate are measured at cost less accumulated impairment, if any.

PPE is derecognized on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset(calculated as the difference between the net disposal proceeds and the net carrying amount of the asset) is recognized in other income / netted off from anyloss on disposal in the Statement of profit and loss in the year the asset is derecognized.

Transactions in foreign currencies are recognized at the prevailing exchange rates between the reporting currency and a foreign currency on thetransaction date.

Property, Plant and Equipments (PPE) (Continued)

Conversion

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. Allother foreign exchange gains and losses are presented in the Statement of profit and loss on a net basis.

Non-monetary items that are measured at historical cost in foreign currency are not retranslated at reporting date.Financial instruments :

Recognition and initial measurement -

Transactions in foreign currencies are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreigncurrencies at year end exchange rates are generally recognized in Statement of profit and loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value wasdetermined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Thus, translationdifferences on non- monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognized in profit or loss aspart of the fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as FVOCI are recognized inother comprehensive income.

Classification and Subsequent measurement of financial assets

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue offinancial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of thefinancial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets orfinancial liabilities at FVTPL are recognized immediately in Statement of profit and loss.

On initial recognition, a financial asset is classified as measured at - Amortized cost; - FVOCI - debt instruments; - FVOCI - equity instruments; - FVTPL

The Company's business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios being the level atwhich they are managed. The financial asset is held with the objective to hold financial asset in order to collect contractual cash flows as per thecontractual terms that give rise on specified dates to cash flows that are solely payment of principal and interest (SPPI) on the principal amountoutstanding. Accordingly, the Company measures Bank balances, Loans, Trade receivables and other financial instruments at amortized cost.

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

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2.11b)

FVOCI - debt instruments -

FVOCI - equity instruments -

c)

d)

e) Derecognition

Financial assets at amortized cost are subsequently measured at amortized cost using effective interest method. The amortized cost is reduced byimpairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in Statement of profit and loss. Any gain and losson derecognition is recognized in Statement of profit and loss.

Subsequent measurement of financial assets

The Company measures its debt instruments at FVOCI when the instrument is held within a business model, the objective of which is achieved by bothcollecting contractual cash flows and selling financial assets; and the contractual terms of the financial asset meet the SPPI test.

The Company subsequently measures all equity investments at fair value through profit or loss, unless the Company’s management has elected to classifyirrevocably some of its equity instruments at FVOCI, when such instruments meet the definition of Equity under Ind AS 32 Financial Instruments and arenot held for trading.

All financial assets not classified as measured at amortized cost or FVOCI are measured at FVTPL. This includes all derivative financial assets.

Financial instruments : (Continued)Classification and Subsequent measurement of financial assets (Continued)

'Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model formanaging financial assets.

Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized inStatement of profit and loss.

Financial liabilities and equity instruments:

Financial liabilities - Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading or it is a derivative or it is designated as such on initial recognition. Other financial liabilities are subsequently measured at amortized cost usingthe effective interest method. Interest expense and foreign exchange gains and losses are recognized in Statement of profit and loss. Any gain or loss onderecognition is also recognized in Statement of profit and loss.

Financial guarantee contracts:

- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 - Financial Instruments; and- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 115 -Revenue from Contracts with Customers.

Financial assetsThe Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights toreceive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred orin which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

Debt investment at FVOCI are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and lossesand impairment are recognized in Statement of profit and loss. Other net gains and losses are recognized in OCI. On derecognition, gains and lossesaccumulated in OCI are reclassified to Statement of profit and loss.For equity investments, the Company makes an election on an instrument-by-instrument basis to designate equity investments as measured at FVOCI.These elected investments are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive incomeand accumulated in the reserves. The cumulative gain or loss is not reclassified to Statement of profit and loss on disposal of the investments. Theseinvestments in equity are not held for trading. Instead, they are held for strategic purpose. Dividend income received on such equity investments arerecognized in Statement of profit and loss. Equity investments that are not designated as measured at FVOCI are designated as measured at FVTPL and subsequent changes in fair value arerecognized in Statement of profit and loss.

Classification as debt or equity - Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of thecontractual arrangements and the definitions of a financial liability and an equity instrument.Equity instruments - An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instrumentsissued by Company are recognized at the proceeds received. Transaction costs of an equity transaction are recognized as a deduction from equity.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because aspecified debtor fails to make payments when due in accordance with the terms of a debt instrument.Financial guarantee contracts issued by a Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequentlymeasured at the higher of:

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2.11e)

f) Offsetting

g)

h)

i)

Financial liabilitiesA financial liability is derecognized when the obligation in respect of the liability is discharged, cancelled or expires. The difference between the carryingvalue of the financial liability and the consideration paid is recognized in Statement of profit and loss.

Financial instruments : (Continued)

Financial assets (Continued)If the Company enters into transactions whereby it transfers assets recognized on its balance sheet, but retains either all or substantially all of the risks andrewards of the transferred assets, the transferred assets are not derecognized.

Derecognition (Continued)

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has alegally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liabilitysimultaneously.Derivative financial instruments

Derivatives are initially recognized at fair value at the date the contracts are entered into and are subsequently remeasured to their fair value at the end ofeach reporting period. The resulting gain/loss is recognized in Statement of profit and loss.Impairment of financial instruments

The Company recognizes lifetime expected credit losses (ECL) when there has been a significant increase in credit risk since initial recognition and whenthe financial instrument is credit impaired. If the credit risk on the financial instrument has not increased significantly since initial recognition, theCompany measures the loss allowance for that financial instrument at an amount equal to 12 month ECL. The assessment of whether lifetime ECL shouldbe recognized is based on significant increases in the likelihood or risk of a default occurring since initial recognition. 12 month ECL represents theportion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Company recognizes lifetime ECL for trade, lease and other receivables. The expected credit losses on these financial assets are estimated using aprovision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economicconditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money whereappropriate. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financialinstrument.Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI,the loss allowance is recognized in OCI and carrying amount of the financial asset is not reduced in the balance sheet. Collateral repossessed -

In the normal course of business, the Company does not physically repossess assets/properties in its loan portfolio, but engages external agents torepossess and recover funds, generally by selling at auction, to settle outstanding debt. Any surplus funds are returned to the customers/ obligors. As aresult of this practice, the assets / properties under legal repossession processes are not separately recorded on the balance sheet.

The Company enters into derivative financial instruments, primarily foreign exchange forward contracts, currency swaps and interest rate swaps, tomanage its borrowing exposure to foreign exchange and interest rate risks.Derivatives embedded in non-derivative host contracts are treated as separate derivatives when their risks and characteristics are not closely related tothose of the host contracts and the host contracts are not measured at FVTPL.

Equity instruments are not subject to impairment under Ind AS 109.

When determining whether credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses,the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitativeand qualitative information and analysis, including on historical experience and forward-looking information. (refer note 50).

Management overlay is used to adjust the ECL allowance in circumstances where management judges that the existing inputs, assumptions and modeltechniques do not capture all the risk factors relevant to the Company's lending portfolios. Emerging local or global macroeconomic, micro economic orpolitical events, and natural disasters that are not incorporated into the current parameters, risk ratings, or forward looking information are examples ofsuch circumstances. The use of management overlay may impact the amount of ECL recognized.

'Based on operational requirements, the Company’s policy is to determine whether a repossessed asset can be best used for its internal operations orshould be sold. Assets determined to be useful for the internal operations are transferred to their relevant asset category for capitalization at their fairmarket value.

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2.11j) Write offs -

2.12a)

b)

c)

d)

e)

f)

2.13

The Company makes contribution to the Superannuation scheme, a defined contribution scheme, administered by Life Insurance Corporation of India,which are charged to the Statement of profit and loss. The Company has no obligation to the scheme beyond its contributions.

Employee benefits:Short-term employee benefitsShort-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Companyhas a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimatedreliably.Contribution to provident fund, ESIC and National Pension Scheme -Company's contribution paid/payable during the year to provident fund, ESIC and National Pension Scheme is recognized in the Statement of profit andloss.Gratuity -

Remeasurement gains or losses on long-term compensated absences that are classified as other long-term benefits are recognized in Statement of profitand loss.Superannuation fund -

The Company's liability towards gratuity scheme is determined by independent actuaries, using the projected unit credit method. The present value of thedefined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting periodon government bonds that have terms approximating to the terms of the related obligation. Past services are recognized at the earlier of the planamendment / curtailment and recognition of related restructuring costs/termination benefits.The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. Thiscost is included in employee benefit expense in the Statement of profit and loss.Remeasurement gains/losses - Remeasurement of defined benefit plans, comprising of actuarial gains / losses, return on plan assets excluding interest income are recognizedimmediately in the balance sheet with corresponding debit or credit to Other Comprehensive Income (OCI). Remeasurements are not reclassified toStatement of profit and loss in the subsequent period.

Finance costs include interest expense computed by applying the effective interest rate on respective financial instruments measured at Amortized cost.Financial instruments include bank term loans, non-convertible debentures, fixed deposits mobilized, commercial papers, subordinated debts and exchangedifferences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Finance costs are charged to theStatement of profit and loss.

Leave encashment / compensated absences / sick leave -The Company provides for the encashment / availment of leave with pay subject to certain rules. The employees are entitled to accumulate leave subjectto certain limits for future encashment / availment. The liability is provided based on the number of days of unutilized leave at each balance sheet date onthe basis of an independent actuarial valuation.Employee stock options :Equity-settled share-based payments to employees are recognized as an expense at the fair value of equity stock options at the grant date. The fair valuedetermined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the graded vesting period, based on theCompany's estimate of equity instruments that will eventually vest, with a corresponding increase in equity.

Finance costs :

Effective from 1 April 2019, on application of Ind AS 116 (Leases), interest expense on lease liabilities computed by applying the Company's weightedaverage incremental borrowing rate has been included under finance costs.

The gross carrying amount of a financial asset is written off when there is no realistic prospect of further recovery. This is generally the case when theCompany determines that the debtor/borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amountssubject to the write- off. However, financial assets that are written off could still be subject to enforcement activities under the Company’s recoveryprocedures, taking into account legal advice where appropriate. Any recoveries made from written off assets are netted off against the amount of financialassets written off during the year under "Bad debts and write offs" forming part of "Impairment on financial instruments" in Statement of profit and loss.

Financial instruments : (Continued)

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2.14

a)

b)

2.15

2.16

2.17

2.18

Taxation - Current and deferred tax:Income tax expense comprises of current tax and deferred tax. It is recognized in Statement of profit and loss except to the extent that it relates to an itemrecognized directly in equity or in other comprehensive income.

Current tax :Current tax comprises amount of tax payable in respect of the taxable income or loss for the year determined in accordance with Income Tax Act, 1961and any adjustment to the tax payable or receivable in respect of previous years. The Company’s current tax is calculated using tax rates that have beenenacted or substantively enacted by the end of the reporting period. Significant judgments are involved in determining the provision for income taxesincluding judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which canonly be resolved over extended time periods.Deferred tax :

Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporarydifference could be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition ofassets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewedat the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or partof the asset to be recovered.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets andliabilities and their respective tax bases. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in whichthe liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reportingperiod. The measurement of deferred tax liabilities and assets reflects the tax consequence that would follow from the manner in which the Companyexpects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

The Company reviews the carrying amounts of its tangible (including assets given on operating lease) and intangible assets at the end of each reporting period,to determine whether there is any indication that those assets have impaired. If any such indication exists, the recoverable amount of the asset is estimated inorder to determine the extent of the impairment loss (if any). Recoverable amount is determined for an individual asset, unless the asset does not generate cashflows that are largely independent of those from other assets or group of assets.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted totheir present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for whichthe estimates of future cash flows have not been adjusted.If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of itsrecoverable amount such that the increased carrying amount does not exceed the carrying amount that would have been determined if no impairment loss hadbeen recognized for the asset (or cash-generating unit) in prior years. The reversal of an impairment loss is recognized in Statement of profit and loss.

Provisions are recognized when there is a present obligation as a result of a past event, and it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are reviewed at each balance sheetdate and adjusted to reflect the current best estimate.

The Company as a lessee - As a lessee, the Company’s lease asset class primarily consist of buildings or part thereof taken on lease for office premises and certain IT equipments used foroperating activities. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contractconveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right tocontrol the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantiallyall of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

Provisions :

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax ratethat reflects current market assessments of the time value of money and the risks specific to the liability. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure ismade.Leases :

Securities issue expenses :Expenses incurred in connection with fresh issue of Share capital are adjusted against Securities premium reserve.Impairment of assets other than financial assets :

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2.18

2.19

The Company has adopted Ind AS 116, Leases, effective 1 April 2019 using modified retrospective approach of transition without restating the figures forprior periods. Consequently, the Company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rateand the right of use asset at its carrying amount as if the standard had been applied since the commencement date of the lease, but discounted at theCompany’s incremental borrowing rate at the date of initial application. Comparatives as at and for the year ended March 31,2019 have not beenretrospectively adjusted and therefore will continue to be reported under the accounting policies included as part of our Annual Report for year ended March31, 2019.

The effect of transition to Ind AS 116 and other disclosures are set out under note no. 41.

ROU assets and Lease liabilities have been separately presented in the Balance Sheet and the principal portion of lease payments have been classified asfinancing cash flows.

Leases : (Continued)At the date of commencement of the lease, the Company recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangementsin which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low valueleases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includesthese options when it is reasonably certain that they will be exercised.

d) Cash payments for the principal of the lease liability have been presented within "financing activities" in the statement of cash flows;

The right-of-use assets are initially recognized at cost which comprises of initial amount of lease liability adjusted for any lease payments made at or prior tothe commencement date of the lease plus any initial direct costs less any lease incentives. These are subsequently measured at cost less accumulateddepreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of thelease term and useful life of the underlying asset.

Cash and cash equivalents:Cash and cash equivalents in the balance sheet comprise cash on hand, cheques and drafts on hand, balance with banks in current accounts and short-termdeposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value.

The Company has given certain vehicles on lease where it has substantially retained the risks and rewards of ownership and hence these are classified asoperating leases. These assets given on operating lease are included in PPE. Lease income is recognized in the Statement of profit and loss as per contractualrental unless another systematic basis is more representative of the time pattern in which the benefit derived from the leased asset is diminished. Costsincluding depreciation are recognized as an expense in the Statement of profit and loss. Initial direct costs are recognized immediately in Statement of profitand loss.

Further, on application of Ind AS 116, the nature of expense in the Statement of profit or loss has changed from lease rent in previous periods to depreciationcost for the ROU asset and finance cost for interest on lease liability in the current financial year.

The lease liability is initially measured at amortized cost at the present value of the future lease payments that are not paid at the commencement date,discounted using the Company's incremental average borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related right ofuse asset if the Company changes its assessment if whether it will exercise an extension or a termination option.

Where the Company is the lessor -At the inception of the lease, the Company classifies each of its leases as either a finance lease or an operating lease. Whenever the terms of the lease transfersubstantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

Transition to Ind AS 116Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian AccountingStandards) Second Amendment Rules, has notified Ind AS 116, Leases, which replaces the existing lease standard, Ind AS 17 leases, and other interpretations.Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single,on-balance sheet lease accounting model for lessees.

On application of Ind AS 116, financial information is presented in the following manner for the year ended 31 March 2020.a) ROU assets and lease liabilities have been included within the line items "Property, plant and equipment" and "Other financial liabilities" respectively inthe Balance sheet;b) Interest expenses on the lease liability and depreciation charge for the right-to-use asset have been included within the line items "Finance costs" and"Depreciation, amortization and impairment" respectively in the statement of profit or loss;c) Short-term lease payments and payments for leases of low-value assets, where exemption as permitted under this standard is availed, have been recognizedas expense on a straight line basis over the lease term in the statement of profit or loss.

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2.20

2.21

Earnings Per Share :Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number ofequity shares outstanding during the period. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the period afterdeducting preference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the periodand for all periods presented is adjusted for events, such as bonus shares, sub-division of shares etc. that have changed the number of equity sharesoutstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the periodattributable to equity shareholders is divided by the weighted average number of equity shares outstanding during the period, considered for deriving basicearnings per share and weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards. There is no such notification which would have beenapplicable from 1 April, 2020.

Standards issued but not yet effective :

142

Notes forming part of the Financial Statements (Continued)as at 31 March 2020

3 Cash and cash equivalentsRs. in lakhs

31 March 2020 31 March 2019 Cash on hand 1,430.30 2,717.34 Cheques and drafts on hand 300.91 1,601.77 Balances with banks in current accounts 45,947.83 45,848.63 Term deposits with original maturity up to 3 months 20,000.00 -

67,679.04 50,167.74

4 Bank balances other than cash and cash equivalentsRs. in lakhs

31 March 2020 31 March 2019 Earmarked balances with banks - - Unclaimed dividend accounts 68.66 89.78 Term deposits with maturity less than 12 months - - Free 4,575.00 15,001.00 - Under lien # 70,255.78 30,590.65

74,899.44 45,681.43

# Details of Term deposits - Under lienRs. in lakhs

Particulars Bank balances other than

cash and cash equivalents

(Note 4)

Other financial

assets(Note 9)

Total Bank balances other than

cash and cash equivalents

(Note 4)

Other financial assets

(Note 9)Total

22,501.00 20,000.00 42,501.00 5,517.23 7,500.00 13,017.23 46,208.47 4,330.00 50,538.47 24,538.61 - 24,538.61

21.31 - 21.31 9.81 11.50 21.31 1,500.00 - 1,500.00 500.00 - 500.00

25.00 100.00 125.00 25.00 - 25.00 70,255.78 24,430.00 94,685.78 30,590.65 7,511.50 38,102.15

5 Derivative financial instrumentsRs. in lakhs

Notional amounts

Fair value of Assets

Notional amounts


Currency derivatives : Forward contracts 58,205.49 2,323.02 59,659.22 917.97 Options 205,079.75 6,969.74 - 88.42

Total derivative financial instruments 263,285.24 9,292.76 59,659.22 1,006.39

Rs. in lakhs

For Statutory Liquidity RatioFor securitization transactionsLegal deposits

Collateral deposits with banks for Aadhaar authentication and othersFor Constituent Subsidiary General Ledger (CSGL) account


As at 31 March 2019As at 31 March 2020

31 March 2019

Total

31 March 2020

143

Notes forming part of the Financial Statements (Continued)as at 31 March 2020Rs. in lakhs


6 ReceivablesRs. in lakhs

31 March 2020 31 March 2019 Trade receivables

i) Secured, considered good - Lease rental receivable on operating lease transactions 64.64 18.85 Less : Impairment loss allowance (1.48) -

63.16 18.85 ii) Unsecured, considered good :

- Subvention and other income receivables 795.55 500.34 iii) Credit impaired :

373.39 373.39 - Subvention and other income receivables 50.74 -

424.13 373.39 Less : Impairment loss allowance (424.13) (373.39)

- - 858.71 519.19

7 Loans Rs. in lakhs

31 March 2020 31 March 2019 A) Loans (at amortized cost) :

Retail loans 6,443,978.16 5,874,147.34 Small and Medium Enterprise (SME) financing 186,440.83 188,053.12 Bills of exchange 53,166.01 61,534.86 Trade advances 123,934.89 187,430.56 Inter corporate deposits to related parties 100.00 100.00 Total (Gross) 6,807,619.89 6,311,265.88 Less : Impairment loss allowance (308,272.85) (186,303.08) Total (Net) 6,499,347.04 6,124,962.80

B) i) Secured by tangible assets 6,533,209.61 5,981,320.04 ii) Secured by intangible assets - - iii) Covered by bank / Government guarantees - - iv) Unsecured 274,410.28 329,945.84 Total (Gross) 6,807,619.89 6,311,265.88 Less : Impairment loss allowance (308,272.85) (186,303.08) Total (Net) 6,499,347.04 6,124,962.80

C) i) Loans in India - - a) Public Sector - - b) Others 6,807,619.89 6,311,265.88

Total (Gross) 6,807,619.89 6,311,265.88 Less : Impairment loss allowance (308,272.85) (186,303.08) Total (Net) - C (i) 6,499,347.04 6,124,962.80 ii) Loans outside India - - Less : Impairment loss allowance - - Total (Net) - C (ii) - - Total (Net) - C (i+ii) 6,499,347.04 6,124,962.80

Note: There is no loan asset measured at FVOCI or FVTPL or designated at FVTPL.

There is no due by directors or other officers of the company or any firm or private company in which any director is a partner, a director or a member.

- Trade receivable on hire purchase transactions

144


8 Investments

Investments Amortizedcost

Others(at cost)

Total Amortizedcost

Others(at cost)

TotalThrough

OCIThrough

profit or lossSub-total Through

OCIThrough

profit or lossSub-total

Units of mutual funds - - 324,125.20 324,125.20 - 324,125.20 - - 62,349.01 62,349.01 - 62,349.01 Government securities 98,049.30 14,301.61 14,301.61 112,350.91 70,922.15 - - - - 70,922.15 Debt securities -

i) Secured redeemable non-convertible debentures 2,500.00 - - - - 2,500.00 6,200.00 - - - - 6,200.00 - - - - - - - - - - -

12,409.65 - - - - 12,409.65 21,359.96 - - - - 21,359.96 iv) Commercial Papers - - - - - - 21,994.94 - 59,070.39 59,070.39 - 81,065.33 v) Certificate of deposits with banks - - - - 46,910.08 46,910.08 46,910.08

- 10,474.76 10,474.76 - 10,474.76 - - - - - - - - - - - 1,088.52 - 1,088.52 - 1,088.52

Equity instruments - a) Subsidiaries

i) Mahindra Insurance Brokers Limited - - - - 45.16 45.16 - - - - 45.16 45.16 ii) Mahindra Rural Housing Finance Limited - - - - 79,929.79 79,929.79 - - - - 51,252.22 51,252.22 iii) Mahindra Asset Management Company Private Ltd. - - - - 21,000.00 21,000.00 - - - - 16,000.00 16,000.00 iv) Mahindra Trustee Company Private Ltd. - - - - 50.00 50.00 - - - - 50.00 50.00 v) Mahindra Finance CSR Foundation - - - - 0.10 0.10

b) Associatesi) 49% Ownership in Mahindra Finance USA, LLC - - - - 21,054.81 21,054.81 - - - - 21,054.81 21,054.81

ii) 38.20% Ownership in Ideal Finance Limited, Sri Lanka 4,399.60 4,399.60 - - - - - -


31 March 2020 At Fair Value


Rs. in lakhs

ii) Unsecured redeemable non-convertible subordinate debentures

vii) Optionally Convertible Debentures of AAPCA Demystifying Data Technology Private Limited

iii) Investments in Pass Through Certificates under securitization transactions

(Joint venture entity with De Lage Landen Financial Services INC. in United States of America)

(Joint venture entity with Ideal Finance Limited in Sri Lanka)

vi) Investment in Bonds of Food Corporation of India and NCDs of NABARD

145



Rs. in lakhs

8 Investments (Continued)

Investments Amortizedcost

Others(at cost)

Total Amortizedcost

Others(at cost)

Total

Through OCI

Through profit or loss

Sub-total Through OCI

Through profit or loss

Sub-total

c) Others- 1,361.32 - 1,361.32 - 1,361.32 - 1,154.65 - 1,154.65 - 1,154.65

- 311.98 - 311.98 - 311.98 - - - - - -

- 1,218.53 - 1,218.53 - 1,218.53 - - - - - -

- - - - 1.00 1.00 - - - - 1.00 1.00 Total - Gross (A) 112,958.95 27,668.20 324,125.20 351,793.40 126,480.46 591,232.81 120,477.05 2,243.17 168,329.48 170,572.65 88,403.19 379,452.89

i) Investments outside India - - - - 25,454.41 25,454.41 - - - - 21,054.81 21,054.81 ii) Investments in India 112,958.95 27,668.20 324,125.20 351,793.40 101,026.05 565,778.40 120,477.05 2,243.17 168,329.48 170,572.65 67,348.38 358,398.08

Total - Gross (B) 112,958.95 27,668.20 324,125.20 351,793.40 126,480.46 591,232.81 120,477.05 2,243.17 168,329.48 170,572.65 88,403.19 379,452.89 Less : Allowance for Impairment loss ( C ) 136.19 - - - - 136.19 282.52 - - - - 282.52 Total - Net D (A-C) 112,822.76 27,668.20 324,125.20 351,793.40 126,480.46 591,096.62 120,194.53 2,243.17 168,329.48 170,572.65 88,403.19 379,170.37

i) 'Equity investment in Smartshift Logistics Solutions PrivateLimited (formerly known as Orizonte Business SolutionsLimited which was later acquired by Resfeber Labs PrivateLimited)

iii) 'Equity investment in AAPCA Demystifying DataTechnology Private Limited (Optionally ConvertibleDebentures converted in to equity shares on exercise ofconversion option after meeting applicable terms andconditions)

ii) Compulsorily Convertible Cumulative Participating Preference Shares (CCCPS) in Smartshift Logistics Solutions Private Limited (formerly known as OrizonteBusiness Solutions Limited which was later acquired byResfeber Labs Private Limited)

31 March 2020 31 March 2019 At Fair Value At Fair Value

iv) 'New Democratic Electoral Trust

146


9 Other financial assetsRs. in lakhs

31 March 2020

31 March 2019

Interest accrued on investments 2,236.35 1,476.20 Interest accrued on other deposits 4,606.70 939.97 Security Deposits 3,277.18 3,008.10 Term deposits with banks (remaining maturity more than 12 months) - Free 11,885.00 - - Under lien 24,430.00 7,511.50 Others 1,230.04 3,959.36

47,665.27 16,895.13

10 Deferred tax assets (net) and Tax expense(i) Deferred tax assets (net)

Rs. in lakhs Balance as at

1 April 2018 Charge/

(credit) to profit and

loss

Charge/ (credit) to

equity Charge/

(credit) to OCI

Balance as at31 March

2019 Charge/

(credit) to profit and

loss

Charge/ (credit) to

equity Charge/

(credit) to OCI

Balance as at31 March

2020

(6,972.92) (2,937.46) - - (9,910.38) 2,019.32 (7,891.06)(2,367.99) (1,268.33) - - (3,636.32) 1,207.47 (2,428.85)

- Share based payments (703.06) (470.85) - - (1,173.91) 11.70 - - (1,162.21) - FVTPL financial asset (9.37) (238.98) - - (248.35) (588.69) - - (837.04) - Others (999.79) (605.84) (749.03) - (2,354.66) (3,626.92) - - (5,981.58)

(11,053.13) (5,521.46) (749.03) - (17,323.62) (977.12) - - (18,300.74)

- Provision for employee benefits 1,980.05 (121.14) - 462.87 2,321.78 566.12 - (28.77) 2,859.13 - Derivatives 2,130.60 1,909.02 - - 4,039.62 2,385.86 - - 6,425.48 - Allowance for ECL 62,476.01 (22,587.40) - - 39,888.61 11,343.53 - - 51,232.14

292.37 - - - 292.37 (81.79) - - 210.58 - Others 6,918.92 1,469.26 - (434.41) 7,953.77 (1,278.56) - (139.14) 6,536.07

73,797.95 (19,330.26) - 28.46 54,496.15 12,935.16 - (167.91) 67,263.40 Net deferred tax assets 62,744.82 (24,851.72) (749.03) 28.46 37,172.53 11,958.04 - (167.91) 48,962.66

(ii) Income tax recognized in Statement of profit and loss Rs. in lakhs

31 March 2020

31 March 2019

(a) Current tax:In respect of current year 55,693.89 57,411.73 In respect of prior years - 274.39

55,693.89 57,686.12 (b) Deferred tax:In respect of current year origination and reversal of temporary differences (22,357.49) 24,851.72 In respect of rate change (Re-measurement of opening deferred tax assets due to income tax rate change from 34.944% to 25.168%) # 10,399.45 -

(11,958.04) 24,851.72 Total Income tax recognized in Statement of profit and loss 43,735.85 82,537.84


Tax effect of items constituting deferred tax liabilities :

Tax effect of items constituting deferred tax assets :

Rs. in lakhs

- Application of EIR on financial assets - Application of EIR on financial liabilities

- Application of EIR on financial liabilities

147



Rs. in lakhs

10 Deferred tax assets (net) and Tax expense (Continued)(iii) Income tax recognized in Other Comprehensive Income

Rs. in lakhs 31 March

2020 31 March

2019

Deferred tax related to items recognized in Other Comprehensive Income during the year :Remeasurement of defined employee benefits (28.77) 462.87 Net gain / (loss) on equity instruments through OCI (23.17) (158.87) Net gain / (loss) on debt instruments through OCI (115.97) (275.54) Total Income tax recognized in Other Comprehensive Income (167.91) 28.46

Rs. in lakhs As at

31 March 2020

As at 31 March

2019 Profit before tax 134,376.24 238,244.19 Applicable income tax rate 25.168% 34.944%Expected income tax expense 33,819.81 83,252.05 Tax effect of adjustments to reconcile expected Income tax expense at tax rate to reported income tax expense:Effect of income exempt from tax (1,374.91) (1,186.66) Effect of expenses / provisions not deductible in determining taxable profit 232.34 209.66 Effect of tax incentives and concessions 256.61 446.44 Effect of differential tax rate (Re-measurement of opening deferred tax assets due to income tax rate change from 34.944% to 25.168%) # 10,399.45 - Adjustment related to tax of prior years - 274.39 Others 402.55 (458.04) Reported income tax expense 43,735.85 82,537.84

(iv) Reconciliation of estimated Income tax expense at tax rate to income tax expense reported in the Statement of profit and loss is as follows:

# The Taxation Laws (Amendment) Ordinance, 2019 contain substantial amendments in the Income Tax Act 1961 and the Finance (No.2) Act, 2019 which provides for anoption to domestic companies to pay income tax at a concessional rate. The Company has elected to apply the concessional tax rate. Accordingly, the Company hasrecognized the provision for income tax and re-measured the net deferred tax assets at concessional rate for the year ended 31 March 2020. Further, the opening netdeferred tax asset has been re-measured at lower rate with a one-time impact of Rs.10,399.45 lakhs recognized as transition adjustment in the Statement of profit and lossfor the year ended 31 March 2020.

148


11 Property, plant and equipmentsRs. in lakhs

Particulars Land Buildings # Computers and Data processing

unitsFurniture and

fixturesOffice

equipmentsVehicles Vehicles under

lease P&M under

lease Right-Of-Use

Assets (Leasehold premises )

Total

GROSS CARRYING AMOUNTBalance as at 1 April 2018 81.40 108.92 8,313.57 8,059.17 8,649.89 6,650.42 77.15 - - 31,940.52 Additions during the year - - 1,907.29 976.50 1,164.77 1,608.65 1,153.03 - 6,810.24 Disposals / deductions during the year - - 189.69 115.67 360.74 795.34 1,461.44 Balance as at 31 March 2019 81.40 108.92 10,031.17 8,920.00 9,453.92 7,463.73 1,230.18 - - 37,289.32 Balance as at 1 April 2019 81.40 108.92 10,031.17 8,920.00 9,453.92 7,463.73 1,230.18 - 18,447.50 55,736.82 Additions during the year - - 620.64 693.72 781.89 1,872.33 4,054.48 19.06 4,245.13 12,287.25 Disposals / deductions during the year - - 459.51 190.81 503.13 822.30 - - - 1,975.75 Balance as at 31 March 2020 81.40 108.92 10,192.30 9,422.91 9,732.68 8,513.76 5,284.66 19.06 22,692.63 66,048.32 ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES Balance as at 1 April 2018 - 24.88 5,551.99 5,056.03 6,039.80 4,024.35 1.04 - - 20,698.09 Additions during the year - 1.82 1,473.74 892.59 1,158.70 1,121.60 44.50 - - 4,692.95 Disposals / deductions during the year - - 188.73 103.80 355.51 703.70 - - - 1,351.74 Balance as at 31 March 2019 - 26.70 6,837.00 5,844.82 6,842.99 4,442.25 45.54 - - 24,039.30 Balance as at 1 April 2019 - 26.70 6,837.00 5,844.82 6,842.99 4,442.25 45.54 - - 24,039.30 Additions during the year - 1.84 1,477.56 910.50 1,148.12 1,392.24 438.83 1.39 4,704.38 10,074.86 Disposals / deductions during the year - - 458.65 177.18 500.75 724.00 - - - 1,860.58 Balance as at 31 March 2020 - 28.54 7,855.91 6,578.14 7,490.36 5,110.49 484.37 1.39 4,704.38 32,253.58 NET CARRYING AMOUNTAs at 31 March 2019 81.40 82.22 3,194.17 3,075.18 2,610.93 3,021.48 1,184.64 - - 13,250.02 As at 31 March 2020 81.40 80.38 2,336.39 2,844.77 2,242.32 3,403.27 4,800.29 17.67 17,988.25 33,794.74 # Secured Non-convertible debentures (NCDs) have an exclusive pari-passu charges on Buildings.


Rs. in lakhs

149



Rs. in lakhs

12 Intangible assetsRs. in lakhs

Particulars ComputerSoftware

GROSS CARRYING AMOUNTBalance as at 1 April 2018 3,709.46 Additions during the year 3,661.75 Deductions during the year - Balance as at 31 March 2019 7,371.21 Balance as at 1 April 2019 7,371.21 Additions during the year 1,253.68 Deductions during the year - Balance as at 31 March 2020 8,624.89 ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES Balance as at 1 April 2018 2,985.49 Additions during the year 1,329.57 Deductions during the year - Balance as at 31 March 2019 4,315.06 Balance as at 1 April 2019 4,315.06 Additions during the year 1,754.50 Deductions during the year - Balance as at 31 March 2020 6,069.56 NET CARRYING AMOUNTAs at 31 March 2019 3,056.15 As at 31 March 2020 2,555.33

150


13 Other non-financial assetsRs. in lakhs

31 March 2020 31 March 2019 Capital advances 1,725.31 485.66 Prepaid expenses 3,283.26 2,965.05 Unamortized placement and arrangement fees paid on borrowing instruments 301.13 401.48 Insurance advances 183.18 185.59 Other advances 1,480.80 1,669.05

6,973.68 5,706.83


Notional amounts

Fair value of Liabilities

Notional amounts


Currency derivatives : Forward contracts 20,013.63 2,559.18 20,231.96 2,176.30 Options - 1,456.88 123,078.50 5,526.23

Total derivative financial instruments 20,013.63 4,016.06 143,310.46 7,702.53

15 PayablesRs. in lakhs

31 March 2020 31 March 2019 I) Trade Payables i) total outstanding dues of micro enterprises and small enterprises - - ii) total outstanding dues of creditors other than micro enterprises and small enterprises 60,633.42 97,947.17 II) Other Payables i) total outstanding dues of micro enterprises and small enterprises 17.40 253.29 ii) total outstanding dues of creditors other than micro enterprises and small enterprises 2,923.97 3,164.54

63,574.79 101,365.00

Micro, Small and Medium Enterprises:

Rs. in lakhs 31 March 2020 31 March 2019

a)- Principal 17.40 0.10 - Interest on the above

b) - - - - - -

c) - - d)e) - -

17.40 0.10


Rs. in lakhs

Dues remaining unpaid to any supplier at the year end

Interest paid in terms of Section 16 of the MSMED Act along with the amount of payment made to the supplier beyond the appointed dayduring the yearPrincipal paid beyond the appointed dateInterest paid in terms of Section 16 of the MSMED ActAmount of interest due and payable for the period of delay on payments made beyond the appointed day during the yearAmount of interest accrued and remaining unpaidFurther interest due and payable even in the succeeding years, until such date when the interest due as above are actually paid to the smallenterprises

31 March 2020 31 March 2019

Based on and to the extent of the information received by the Company from the suppliers during the year regarding their status under the Micro, Smalland Medium Enterprises Development Act, 2006 (MSMED Act), the total outstanding dues of Micro and Small enterprises, which are outstanding formore than the stipulated period and other disclosures as per the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as“the MSMED Act”) are given below :

151



Rs. in lakhs

16 Debt SecuritiesRs. in lakhs

31 March 2020 31 March 2019 At Amortized cost

Non-convertible debentures (Secured) 1,699,721.29 1,954,799.74 Non-convertible debentures (Unsecured) 39,800.02 19,893.55 Commercial Papers (Unsecured) 0.00 257,244.63 Rupee Denominated Secured Bonds overseas (Masala Bonds) 34,966.42 -

Total (A+B) 1,774,487.73 2,231,937.92 Debt securities in India 1,739,521.31 2,231,937.92 Debt securities outside India 34,966.42 -

Total 1,774,487.73 2,231,937.92

From the Balance Sheet dateInterest rate range Amount Interest rate range Amount

A) Issued on private placement basis (wholesale) - Repayable on maturity :Maturing within 1 year 7.10%-9.40% 623,700.00 7.29%-9.45% 734,500.00 Maturing between 1 year to 3 years 7.00%-9.49% 369,180.00 7.35%-9.49% 771,150.00 Maturing between 3 years to 5 years 7.45%-8.95% 197,300.00 8.24%-8.95% 98,000.00 Maturing beyond 5 years 7.75%-9.00% 334,250.00 8.70%-9.00% 179,500.00 Sub-total at face value (A) 1,524,430.00 1,783,150.00 B) Issued on retail public issue - Repayable on maturity :Maturing between 1 year to 3 years 9.00%-9.05% 40,540.83 Maturing between 3 years to 5 years 9.10%-9.15% 53,556.11 9.00%-9.15% 94,096.94 Maturing beyond 5 years 9.20%-9.30% 86,915.30 9.20%-9.30% 86,915.30 Sub-total at face value (B) 181,012.24 181,012.24 Total at face value (A+B) 1,705,442.24 1,964,162.24 Less: Unamortized discounting charges 5,720.95 9,362.50 Total amortized cost 1,699,721.29 1,954,799.74


Repayable on maturity :Maturing beyond 5 years 8.53% 40,000.00 8.53% 20,000.00 Total at face value 40,000.00 20,000.00 Less: Unamortized discounting charges 199.98 106.45Total amortized cost 39,800.02 19,893.55


Repayable on maturity :Maturing within 1 year - - 7.70% - 9.05% 265,000.00 Total at face value - 265,000.00 Less: Unamortized discounting charges - 7,755.37 Total amortized cost - 257,244.63

The Secured Non-convertible debentures are secured by pari-passu charges on Buildings (forming part of PPE) and exclusive charges on receivables underloan contracts having carrying value of Rs 19,25,549.49 lakhs (March 2019: Rs 21,27,458.97 lakhs).

Note: There is no debt securities measured at FVTPL or designated at FVTPL.

Details of Commercial Papers (Unsecured):

As at 31 March 2020 As at 31 March 2019

Details of Non-convertible debentures (Secured) :

Details of Non-convertible debentures (Unsecured) - :



152



Rs. in lakhs

16 Debt Securities (Continued)


Repayable on maturity :Maturing between 3 years to 5 years 7.40% 35,000.00 - - Total at face value 35,000.00 - Less: Unamortized discounting charges 33.58 - Total amortized cost 34,966.42 -

17 Borrowings (Other than Debt Securities) 31 March 2020 31 March 2019

At Amortized costa) Term loans

i) Secured - - from banks 1,728,090.56 1,373,553.76 - from banks in foreign currency 18,294.06 63,403.97 - External Commercial Borrowings 273,778.83 137,396.77 - Associated liabilities in respect of securitization transactions 888,170.82 434,734.49

ii) Unsecured - - from banks 26,400.00 5,813.54

b) Loans from related partiesUnsecured -

- Inter-corporate deposits (ICDs) 14,000.00 92,650.00 c) Loans repayable on demand

Secured - - Cash credit facilities with banks - 22,600.50

Total (A+B) 2,948,734.27 2,130,153.03 Borrowings in India 2,674,955.44 1,992,756.26 Borrowings outside India 273,778.83 137,396.77

Total 2,948,734.27 2,130,153.03

Rupee Denominated Secured Bonds overseas (Masala Bonds)


The term loans are secured by exclusive charges on receivables under loan contracts having carrying amount of Rs 20,97,645.76 lakhs (March 2019: Rs14,07,901.91 lakhs).

Note: There is no borrowings measured at FVTPL or designated at FVTPL.

The borrowings have not been guaranteed by directors or others. Also the Company has not defaulted in repayment of principal and interest.

153



Rs. in lakhs

17 Borrowings (Other than Debt Securities) (Continued)


1) Repayable on maturity :Maturing within 1 year 6.55% - 8.90% 171,135.00 8.20% - 8.75% 122,900.00 Maturing between 1 year to 3 years 6.95% - 8.10% 185,000.00 8.60% - 8.75% 43,000.00 Total for repayable on maturity 356,135.00 165,900.00 2) Repayable in installments :i) Monthly -Maturing between 1 year to 3 years 7.85% 10,000.00 8.91% 10,000.00 Sub-Total 10,000.00 10,000.00 ii) Quarterly -Maturing within 1 year 5.45% - 8.55% 152,333.33 8.35% - 8.85% 95,869.05 Maturing between 1 year to 3 years 5.45% - 8.55% 277,190.48 8.35% - 8.85% 209,166.67 Maturing between 3 years to 5 years 8.00% - 8.20% 27,500.00 8.70% - 8.85% 27,857.14 Sub-Total 457,023.81 332,892.86 iii) Half yearly -Maturing within 1 year 7.15% - 10.50% 182,611.11 7.45% - 10.50% 155,000.00 Maturing between 1 year to 3 years 6.80% - 10.50% 331,221.56 7.45% - 10.50% 317,000.00 Maturing beyond 3 years to 5 years 7.75% - 10.50% 120,667.33 8.55% - 10.50% 58,000.00 Sub-Total 634,500.00 530,000.00 iv) Yearly -Maturing within 1 year 7.95% - 8.85% 91,666.67 8.35%-8.80% 44,033.33 Maturing between 1 year to 3 years 7.95% - 8.85% 178,333.33 8.35% - 9.00% 246,133.33 Maturing between 3 years to 5 years - - 8.65% - 8.75% 45,000.00 Sub-Total 270,000.00 335,166.67 Total for repayable in installments 1,371,523.81 1,208,059.52 Total (1+2) (As per contractual terms) 1,727,658.81 1,373,959.52 Less Unamortized Finance Cost (431.75) 405.76 Total Amortized Cost 1,728,090.56 1,373,553.76


Repayable on maturity :Maturing within 1 year LIBOR plus

spread 1.44% -2.20%

18,297.55 LIBOR plus spread 2.00% -2.20%

63,399.36

Total 18,297.55 63,399.36 Less Unamortized Finance Cost 3.49 (4.61)Total Amortized Cost 18,294.06 63,403.97


Maturing between 1 year to 3 years LIBOR plus spread 1.10 -

1.50% 276,243.96 LIBOR plus spread

1.10% 139,698.35

276,243.96 139,698.35 Less Unamortized Finance Cost 2,465.13 2,301.58

273,778.83 137,396.77

Details of term loans from banks (Secured)


As at 31 March 2020


The rates mentioned above are the applicable rates as at the year end date linked to MCLR (Marginal Cost of funds based Lending Rate) and Treasury bills plus spread. Details of Secured term loans from banks in foreign currency (USD)

Details of External Commercial Borrowings (USD & Euro)

As at 31 March 2019

154



Rs. in lakhs

17 Borrowings (Other than Debt Securities) (Continued)


Maturing within 1 year 8.73% - 9.03% 386,697.24 5.2%-9.25% 194,427.46 Maturing between 1 year to 3 years 8.80% - 9.03% 448,365.86 5.2%-9.25% 213,893.72 Maturing between 3 years to 5 years 9.03% 53,107.72 5.2%-9.25% 26,413.31

888,170.82 434,734.49 Less Unamortized Finance Cost - -

888,170.82 434,734.49


Repayable on maturity :Maturing within 1 year 7.80% - 9.00% 26,400.00 8.00% - 8.40% 5,813.54 Total 26,400.00 5,813.54 Less Unamortized Finance Cost - - Total Amortized Cost 26,400.00 5,813.54


Repayable on maturity :Maturing within 1 year 5.00% - 7.60% 12,725.00 7.75% - 9.15% 92,650.00 Maturing between 1 year to 3 years 7.50% 1,275.00 - - Total 14,000.00 92,650.00 Less Unamortized Finance Cost - - Total Amortized Cost 14,000.00 92,650.00


Repayable on maturity :Maturing within 1 year - - 8.70%-9.80% 22,600.50 Total - 22,600.50 Less Unamortized Finance Cost - - Total Amortized Cost - 22,600.50

18 DepositsRs. in lakhs

31 March 2020 31 March 2019 At amortized cost

Deposits (Unsecured)- Public deposits 881,213.98 566,718.41

Total 881,213.98 566,718.41

Note: There is no deposits measured at FVTPL or designated at FVTPL.




Details of associated liabilities related to Securitization transactions

Details of Unsecured term loans from banks

Details of Loans from related parties (Unsecured) - Inter-corporate deposits (ICDs)

Details of Loans repayable on demand (Secured) - Cash credit facilities with banks


155



Rs. in lakhs

18 Deposits (Continued)


Repayable on maturity :Maturing within 1 year 7.00% - 9.60% 166,223.58 7.30% - 10.10% 137,787.00 Maturing between 1 year to 3 years 6.9% - 9.15% 610,885.66 7.35% - 9.60% 367,398.25 Maturing beyond 3 years 7.65% - 9.15% 108,286.07 7.35% - 10.10% 64,702.42 Total at face value 885,395.31 569,887.68 Less: Unamortized discounting charges 4,181.33 3,169.27 Total amortized cost 881,213.98 566,718.41

19 Subordinated liabilitiesRs. in lakhs

31 March 2020 31 March 2019 At Amortized cost

Subordinated redeemable non-convertible debentures - private placement 95,790.59 110,167.06 Subordinated redeemable non-convertible debentures - retail public issue 246,003.98 245,716.76

Total 341,794.57 355,883.82 Subordinated liabilities in India 341,794.57 355,883.82 Subordinated liabilities outside India - -

Total 341,794.57 355,883.82

Note: There is no Subordinated liabilities measured at FVTPL or designated at FVTPL.


A) Issued on private placement basis (wholesale) - Repayable on maturity :Maturing within 1 year 9.50% - 9.80% 27,220.00 9.85% - 10.02% 14,500.00 Maturing between 1 year to 3 years 9.80% - 10.50% 17,050.00 9.50% - 10.50% 37,270.00 Maturing between 3 years to 5 years 9.18% - 9.70% 34,280.00 9.50% - 10.15% 19,780.00 Maturing beyond 5 years 8.90% - 9.10% 17,500.00 8.90% - 9.60% 39,000.00 Sub-total at face value (A) 96,050.00 110,550.00 B) Issued on retail public issue - Repayable on maturity :Maturing between 1 year to 3 years 8.34% - 8.70% 5,465.78 8.34% - 8.70% 5,465.78 Maturing between 3 years to 5 years 7.75% - 8.80% 7,165.96 8.44% - 8.80% 1,233.72 Maturing beyond 5 years 7.90% - 9.50% 236,108.62 7.75% - 9.50% 242,040.86 Sub-total at face value (B) 248,740.36 248,740.36 Total at face value (A+B) 344,790.36 359,290.36 Less: Unamortized discounting charges 2,995.79 3,406.54 Total amortized cost 341,794.57 355,883.82



Details of Deposits (Unsecured) - Public deposits

Details of Subordinated liabilities (at Amortized cost) - Subordinated redeemable non-convertible debentures

156



Rs. in lakhs

20 Other financial liabilitiesRs. in lakhs

31 March 2020 31 March 2019 Interest accrued but not due on borrowings 192,672.92 175,351.64 Unclaimed dividends 68.66 89.36 Unclaimed matured deposits and interest accrued thereon 522.20 504.63 Deposits / advances received against loan agreements 5,744.55 6,937.36 Insurance premium payable 338.57 1,073.79 Salary, Bonus and performance payable 3,742.19 390.90 Provision for expenses 7,701.18 7,650.56 Lease liabilities (refer note 41) 18,880.38 - Others 1,725.38 664.71 Total 231,396.03 192,662.95

21 ProvisionsRs. in lakhs

31 March 2020 31 March 2019 Provision for employee benefits - Gratuity 2,431.55 3,140.89 - Leave encashment 6,608.32 5,401.91 - Bonus, incentives and performance pay 5,168.95 11,830.81 Provision for loan commitment 114.01 279.09 Total 14,322.83 20,652.70

22 Other non-financial liabilitiesRs. in lakhs

31 March 2020 31 March 2019 Deferred subvention income 2,691.27 2,692.81 Statutory dues and taxes payable 6,470.23 5,177.28 Others 641.93 657.75 Total 9,803.43 8,527.84

23 Equity Share capitalRs. in lakhs

31 March 2020 31 March 2019

70,00,00,000 (31 March 2019: 70,00,00,000) Equity shares of Rs.2/- each 14,000.00 14,000.00 5,000.00 5,000.00

12,355.30 12,355.30 48.35 57.76

12,306.95 12,297.54

Issued, Subscribed and paid-up:

Adjusted Issued, Subscribed and paid-up Share capital

61,77,64,960 (31 March 2019: 61,77,64,960) Equity shares of Rs.2/- each fully paid upLess : 24,17,256 (31 March 2019: 28,88,245) Equity shares of Rs.2/- each fully paid up issued to ESOS Trust but not yet allotted toemployees

Authorized:

50,00,000 (31 March 2019: 50,00,000) Redeemable preference shares of Rs.100/- each

157



Rs. in lakhs

23 Equity Share capital (Continued)

No. of shares Rs. in lakhs No. of shares Rs. in lakhsa)

617,764,960 12,355.30 617,764,960 12,355.30 - - - -

617,764,960 12,355.30 617,764,960 12,355.30 2,417,256 48.35 2,888,245 57.76

615,347,704 12,306.95 614,876,715 12,297.54 b)

316,207,660 6,324.15 316,207,660 6,324.15 51.19% 51.19% 51.19% 51.19%

c)Mahindra & Mahindra Limited 316,207,660 6,324.15 316,207,660 6,324.15

51.19% 51.19% 51.19% 51.19%d)

Description of the nature and purpose of Other Equity :Statutory reserve

Capital redemption reserve (CRR)

Securities premium reserve

General reserve

Debenture Redemption Reserve (DRR)

Employee stock options outstandingThe Employee Stock Options outstanding represents amount of reserve created by recognition of compensation cost at grant date fair value on stockoptions vested but not exercised by employees and unvested stock options in the Statement of profit and loss in respect of equity-settled share optionsgranted to the eligible employees of the Company and its subsidiaries in pursuance of the Employee Stock Option Plan.

Reconciliation of number of equity shares and amount outstanding:Issued, Subscribed and paid-up:Balance at the beginning of the yearAdd : Fresh allotment of shares : Balance at the end of the year

Statutory reserve represents reserve fund created pursuant to Section 45-IC of the RBI Act, 1934 through transfer of specified percentage of net profitevery year before any dividend is declared. The reserve fund can be utilized only for limited purposes as specified by RBI from time to time and every such utilization shall be reported to the RBI within specified period of time from the date of such utilization.

Other Equity

General reserve is created through annual transfer of profits at a specified percentage in accordance with applicable regulations under the erstwhileCompanies Act, 1956. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid up capitalof the Company for that year, then the total dividend distribution is less than the total distributable profits for that year. Consequent to introduction of theCompanies Act, 2013, the requirement to mandatorily transfer specified percentage of net profits to General reserve has been withdrawn. However, theamount previously transferred to the General reserve can be utilized only in accordance with the specific requirements of the Companies Act, 2013.


Number of equity shares held by holding company or ultimate holding company including shares held by its subsidiaries / associates:Holding and ultimate holding company : Mahindra & Mahindra LimitedPercentage of holding (%)Shareholders holding more than 5 percent of the aggregate shares:

Until issuance of notification dated 16 August 2019 by MCA through the Companies (Share capital and Debentures) Amendment Rules, 2019, theCompanies Act, 2013 required companies that issue debentures to create a debenture redemption reserve from annual profits until such debentures areredeemed. The Company was required to transfer a specified percentage (as provided in the Companies Act, 2013 ) of the outstanding redeemabledebentures to debenture redemption reserve. The amounts credited to the debenture redemption reserve may be utilized only to redeem debentures. Oncompletion of redemption, the reserve may be transferred to Retained Earnings.

The Company has only one class of equity shares having a par value of Rs.2/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by theboard of directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shareswill be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares heldby the shareholders.

Percentage of holding (%)Terms / rights attached to equity shares :

Capital redemption reserve represents reserve created pursuant to Section 55 (2) (c) of the Companies Act, 2013 by transfer of an amount equivalent tonominal value of the Preference shares redeemed. The CRR may be utilized by the Company, in paying up unissued shares of the Company to be issued tothe members of the Company as fully paid bonus shares in accordance with the provisions of the Companies Act, 2013.

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilized only for limited purposes such as issuance ofbonus shares in accordance with the provisions of the Companies Act, 2013.

Pursuant to issuance of notification dated 16 August 2019 by MCA through the Companies (Share capital and Debentures) Amendment Rules, 2019, theDRR is no longer required for certain class of companies, including listed NBFCs registered with RBI under section 45-IA of the RBI Act, 1934, in thecase of public issue of debentures and privately placed debentures. Accordingly, the Company has not created any amount of DRR for the current financialyear and transferred the carrying amount of DRR created in the earlier years to Retained earnings as it is no longer required.

Less: Shares issued to ESOS Trust but not yet allotted to employeesAdjusted Issued, Subscribed and paid-up Share capital

158



Rs. in lakhs

23 Equity Share capital (Continued)

Description of the nature and purpose of Other Equity : (Continued)Retained earnings

Details of dividends proposedRs. in lakhs

31 March 2020 31 March 2019 Face value per share (Rupees) 2.00 2.00 Dividend percentage Nil 325%Dividend per share (Rupees) - 6.50 Dividend on Equity shares - 40,154.72 Estimated dividend distribution tax - 7,631.31 Total Dividend including estimated dividend distribution tax - 47,786.03

Other Equity (Continued)

The dividends proposed for the financial year ended 31 March 2019 have been paid to shareholders in the subsequent financial year and accounted onpayment basis on approval of the members of the Company at relevant Annual General Meeting. The proposed dividend of 325% pertaining to financialyear ended 31 March 2019 included a special dividend of 125%.The Board of Directors of the Company did not recommend any dividend for the current financial year ended 31 March 2020.

Retained earnings or accumulated surplus represents total of all profits retained since Company's inception. Retained earnings are credited with currentyear profits, reduced by losses, if any, dividend payouts, transfers to General reserve or any such other appropriations to specific reserves.

159


24 Interest incomeRs. in lakhs

31 March 2020 31 March 2019 On financial instruments measured at Amortized cost

Interest on loans 971,196.84 836,962.09 Income from bill discounting 6,157.37 6,535.21 Interest income from investments 9,952.86 16,158.19 Interest on term deposits with banks 6,862.85 1,777.11 Other interest income 1.27 16.78

II) On financial instruments measured at fair value through OCI- 6.40

Total 994,171.19 861,455.78

Note: There is no loan asset measured at FVTPL.25 Fees and commission income


Service charges and other fees on loan transactions 6,768.65 5,659.43 Fees, commission / brokerage received from mutual fund distribution/other products 1,744.30 2,424.02 Collection fees related to transferred assets under securitization transactions 1,185.90 608.31 Total 9,698.85 8,691.76

26 Net gain / (loss) on fair value changesRs. in lakhs

31 March 2020 31 March 2019A) Net gain / (loss) on financial instruments at FVTPL

- On trading portfolio - Investments (191.35) 191.35

B) Others - Mutual fund units 2,806.45 492.52 C) Total Net gain / (loss) on financial instruments at FVTPL 2,615.10 683.87

Fair value changes : - Unrealized 2,615.10 683.87

D) Total Net gain / (loss) on financial instruments at FVTPL 2,615.10 683.87

27 Other incomeRs. in lakhs

31 March 2020 31 March 2019Net gain on derecognition of property, plant and equipment 70.09 80.41 Net gain on sale investments measured at amortized cost 4,574.05 (119.90)Dividend income from Equity investments in subsidiaries 3,037.61 2,007.23 Income from shared services 7,027.70 6,639.74 Others 19.18 82.83 Total 14,728.63 8,690.31


Rs. in lakhs

Interest income from investments in debt instrument

160



Rs. in lakhs

28 Finance costsRs. in lakhs

31 March 2020 31 March 2019On financial liabilities measured at Amortized costInterest on deposits 67,514.64 35,708.17 Interest on borrowings 162,459.30 124,070.59 Interest on debt securities 228,414.76 199,789.70 Interest on subordinated liabilities 31,663.69 29,680.03 Net loss / (gain) in fair value of derivative financial instruments (11,972.85) 2,693.63 Interest expense on lease liabilities (refer note 41) 1,463.00 - Other borrowing costs 3,332.35 2,514.04 Total 482,874.89 394,456.16

29 Impairment on financial instrumentsRs. in lakhs

31 March 2020 31 March 2019On financial instruments measured at Amortized costBad debts and write offs 83,736.48 176,376.70 Loans 121,969.78 (111,011.91)Investments (146.33) (1,016.69)Loan commitment (165.08) (827.27)Trade receivables and other contracts 52.22 - Total 205,447.07 63,520.83

30 Employee benefits expensesRs. in lakhs

31 March 2020 31 March 2019Salaries and wages 100,444.56 96,799.40 Contribution to provident funds and other funds 7,992.71 6,610.45 Share based payments to employees 2,941.80 2,255.02 Staff welfare expenses 3,465.44 3,347.04 Total 114,844.51 109,011.91

31 Depreciation, amortization and impairmentRs. in lakhs

31 March 2020 31 March 2019Depreciation on Property, Plant and Equipment 5,370.48 4,692.95 Amortization and impairment of intangible assets 1,754.50 1,329.57 Depreciation on Right of Use Asset (refer note 41) 4,704.38 - Total 11,829.36 6,022.52

Note: Other than financial liabilities measured at amortized cost, there are no other financial liabilities measured at FVTPL.

Note: Other than financial instruments measured at amortized cost, there is no other financial instrument measured at FVOCI.

161



Rs. in lakhs

32 Other expensesRs. in lakhs

31 March 2020 31 March 2019Rent # (refer note 41) 3,741.10 7,059.14 Rates and taxes, excluding taxes on income 2,522.58 104.44 Electricity charges 1,911.04 2,356.33 Repairs and maintenance 1,157.38 1,358.59 Communication Costs 2,671.97 2,886.56 Printing and Stationery 1,110.73 1,148.74 Advertisement and publicity 1,694.26 3,240.93 Directors' fees, allowances and expenses 346.53 368.18 Auditor's fees and expenses -

- Audit fees 68.98 75.53 - Other services 49.34 81.39 - Reimbursement of expenses 0.14 1.02

Legal and professional charges 13,743.05 15,152.63 Insurance 3,956.13 2,819.22 Manpower outsourcing cost 3,502.95 3,024.39 Donations 3,145.54 2,760.70 Corporate Social Responsibility (CSR) donations and expenses 246.80 167.32 Conveyance and travel expenses 12,273.67 12,402.56 Other expenditure 18,905.32 11,670.06 Total 71,047.51 66,677.73

33 Earning Per Share (EPS)Rs. in lakhs

31 March 2020 31 March 2019Profit for the year (Rs in lakhs) 90,640.39 155,706.35 Weighted average number of Equity Shares used in computing basic EPS 615,043,690 614,621,661 Effect of potential dilutive Equity Shares 1,331,431 1,332,128 Weighted average number of Equity Shares used in computing diluted EPS 616,375,121 615,953,789 Basic Earnings per share (Rs.) (Face value of Rs. 2/- per share) 14.74 25.33 Diluted Earnings per share (Rs.) 14.71 25.28

34 Accumulated Other Comprehensive IncomeRs. in lakhs

31 March 2020 31 March 2019A) Items that will not be reclassified to profit or loss

Balance at the beginning of the year 295.78 - - Net gain / (loss) on equity instruments through OCI 268.65 454.65 Income tax impact thereon (51.94) (158.87)

Balance at the end of the year : Subtotal (A) 512.49 295.78 B) Items that will be reclassified to profit or loss

Balance at the beginning of the year 512.98 - - Net gain / (loss) on debt instruments through OCI 767.09 788.52 - Income tax impact thereon (115.97) (275.54)

Balance at the end of the year : Subtotal (B) 1,164.10 512.98 Accumulated Other Comprehensive Income (A + B) 1,676.59 808.76

# The Company has adopted Ind AS 116, Leases, effective 1 April 2019 using modified retrospective approach of transition without restating the figuresfor prior periods. On application of Ind AS 116, the nature of expense has changed from lease rent in previous periods to depreciation cost for the ROUasset and finance cost for interest accrued on lease liability. Ind AS 116 also provides for certain options and exemptions to recognize short-term leasepayments and payments for leases of low-value assets, which are not included in the measurement of the lease liability and ROU asset, as expense on astraight line basis over the lease term in the statement of profit or loss. Accordingly, rent expenses for the year ended 31 March 2020 comprises of short-term lease payments and payments for leases of low-value assetsrecognized as per Ind AS 116, Leases.

162


35

a)

Particulars Terms and conditionsType of arrangement Contractual life 3 years from the date of each vestingNumber of vested options exercisable Minimum of 50 or number of options vested whichever is lowerMethod of settlement By issue of shares at exercise priceVesting conditions 20% on expiry of 12 months from the date of grant

20% on expiry of 24 months from the date of grant20% on expiry of 36 months from the date of grant20% on expiry of 48 months from the date of grant20% on expiry of 60 months from the date of grant

b)

Particulars Year ended 31 March 2020

Year ended 31 March 2019

N/A Grant dated 24 October

2018Exercise price (Rs.) - 2.00 No. of years vesting - 5 Fair value of option (Rs.) - 355.34

The key assumptions used in black-scholes model for calculating fair value as on the date of grant are:

Year ended31 March

2020Year ended

31 March 2019

Variables# N/A Grant dated 24 October

20181) Risk free interest rate - 7.77%2) Expected life - 4.51 years3) Expected volatility - 37.61%4) Dividend yield - 1.07%

time of option grant (Rs.) - 374.35

# the values mentioned against each of the variables are based on the weighted average percentage of vesting.

Options granted during the year:During the year ended 31 March 2020, the Company has not granted any stock options (31 March 2019: 21,94.249) to the eligible employees underthe Employees’ Stock option scheme 2010. The details of stock options are as under:

5) Price of the underlying share in the market at the

Employees share based payment plan administered through ESOS Trust


Rs. in lakhs

Employee Stock Option PlanThe Company had allotted 48,45,025 Equity shares (face value of Rs.2/- each) under Employee Stock Option Scheme 2010 at par on 3 February 2011 toMahindra and Mahindra Financial Services Limited Employees’ Stock Option Trust set up by the Company. The Trust holds these shares for the benefitof the employees and issues them to the eligible employees as per the recommendation of the Compensation Committee. Upon exercise of stock optionsunder the scheme by eligible employees, the Trust had issued 32,13,044 equity shares to employees up to 31 March 2020 (31 March 2019: 27,42,055equity shares), of which 4,70,989 equity shares (31 March 2019: 3,99,748 equity shares) were issued during the current year.

The terms and conditions of the Employees stock option scheme 2010 are as under :

163



Rs. in lakhs

35c) Summary of stock options:

Particulars No. of stock options

Weighted average

exercise price (Rs.)

No. of stock options

Weighted average


Options outstanding at the beginning of the year 2,866,916 2.00 1,083,987 2.00Options granted during the year - 2.00 2,194,249 2.00Options forfeited / lapsed during the year 42,882 2.00 9,684 2.00Options expired during the year 2,703 2.00 1,888 2.00Options exercised during the year 470,989 2.00 399,748 2.00Options outstanding at the end of the year 2,350,342 2.00 2,866,916 2.00Options vested but not exercised at the end of the year 502,244 2.00 176,151 2.00

d) Information in respect of options outstanding :

Exercise price No. of stock options

Weighted average

remaining lifeNo. of stock

optionsWeighted

average remaining life

Rs.2.00 2,350,342 54 months 2,866,916 62 months

e) Average share price at recognized stock exchange on the date of exercise of the option is as under:

Date of exercise

27 April 2019 to 22 March 2020

f) Determination of expected volatility

In respect of stock options granted under Employee Stock Option Scheme 2010, the accounting is done as per the requirements of Ind AS 102.Consequently, Rs.2,941.80 lakhs (31 March 2019: Rs.2,255.02 lakhs) has been included under 'Employee Benefits Expense' as 'Share-based payment toemployees' based on respective grant date fair value, after adjusting for reversals on account of options forfeited. The amount includes costreimbursements to the holding company of Rs.51.60 lakhs (31 March 2019 : Rs. 27.40 lakhs) in respect of options granted to employees of the Companyand excludes net recovery of Rs.56.96 lakhs (31 March 2019 : Rs.100.36 lakhs) from its subsidiaries for options granted to their employees.

Year ended 31 March 2020 Year ended 31 March 2019Weighted averageshare price (Rs.)

Date of exercise Weighted averageshare price (Rs.)

335.73 441.05

The measure of volatility used in the Black-Scholes option pricing model is the annualized standard deviation of the continuously compounded ratesof return on the stock over a period of time.The determination of expected volatility is based on historical volatility of the stock over the most recent period that is generally commensurate withthe expected life of the option being valued. The period considered for volatility is adequate to represent a consistent trend in the price movementsand the movements due to abnormal events are evened out.Accordingly, since each vest has been considered as a separate grant, the model considers the volatility for periods, corresponding to the expectedlives of different vests, prior to the grant date. Volatility has been calculated based on the daily closing market price of the Company's stock price onNSE over these years. Similar approach was followed in determination of expected volatility based on historical volatility for all the grants under thescheme.

27 April 2018 to 22 March 2019



Employee Stock Option Plan (Continued)

164


36

Gratuity

Post retirement medical

Through its defined benefit plans the company is exposed to a number of risks, the most significant of which are detailed below:Asset volatility -

Change in bond yields -

Inflation risk -

Life expectancy -

Particulars 2020 2019I. Amounts recognized in the Statement of Profit & Loss

Current service cost 1,131.46 979.82 Net Interest cost 216.14 148.59 Past service cost (1,091.19) - Adjustment due to change in opening balance of Plan assets (322.83) (238.81) Total expenses included in employee benefits expense (66.42) 889.60

II. Amount recognized in Other Comprehensive incomeRemeasurement (gains)/losses:a) Actuarial (gains)/losses arising from changes in -

- financial assumptions (1,134.18) (1,324.60) - experience adjustments - -

b) Return on plan assets, excluding amount included in net interest - - expense/ (income)

Total amount recognized in other comprehensive income (1,134.18) (1,324.60)

Funded PlanGratuity

Year ended 31 March


Employee benefitsGeneral description of defined benefit plans

The Company provides for the gratuity, a defined benefit retirement plan covering qualifying employees . The plan provides for lump sum payments toemployees upon death while in employment or on separation from employment after serving for the stipulated period mentioned under The Payment ofGratuity Act, 1972. The Company makes annual contribution to the Gratuity scheme administered by the Life Insurance Corporation of India through itsGratuity fund.

The Company provides for post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto a specifiedage through mediclaim policy on which the premiums are paid by the Company. The eligibility of the employee for the benefit as well as the amount ofmedical cover purchased is determined by the grade of the employee at the time of retirement.

The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets underperform compared to this yield,this will create or increase a deficit. The defined benefit plans may hold equity type assets, which may carry volatility and associated risk.

The present value of some of the defined benefit plan obligations are calculated with reference to the future salaries of plan participants. As such, anincrease in the salary of the plan participants will increase the plan's liability. The post retirement medical benefit obligation is sensitive to medicalinflation and accordingly, an increase in medical inflation rate would increase the plan's liability.

The present value of defined benefit plan obligation is calculated by reference to the best estimate of the mortality of plan participants, both during andafter the employment. An increase in the life expectancy of the plan participants will increase the plan's liability.

Rs. in lakhs

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plan's investment in debt instruments.

Details of defined benefit plans as per actuarial valuation are as follows:

165



Rs. in lakhs

36

Particulars 2020 2019III. Changes in the defined benefit obligation

Opening defined benefit obligation 7,387.71 5,177.73 Add/(less) on account of business combination/transfersCurrent service cost 1,131.46 979.82 Past service cost (1,091.19) - Interest expense 566.64 400.24 Remeasurement (gains)/losses arising from changes in - - demographic assumptions 27.37 35.99 - financial assumptions 770.02 46.94 - experience adjustments (13.70) 990.02 Benefits paid (238.15) (243.03) Closing defined benefit obligation 8,540.16 7,387.71

IV. Change in the fair value of plan assets during the yearOpening Fair value of plan assets 4,246.82 3,016.71 Interest income 350.49 251.65 Expected return on plan assets (350.49) (251.65) Contributions by employer 1,777.11 1,234.34 Adjustment due to change in opening balance of Plan assets 322.83 238.80 Actual Benefits paid (238.15) (243.03) Closing Fair value of plan assets 6,108.61 4,246.82

V. Net defined benefit obligationDefined benefit obligation 8,540.16 7,387.71 Fair value of plan assets 6,108.61 4,246.82 Surplus/(Deficit) 2,431.55 3,140.89 Current portion of the above 648.20 799.78 Non current portion of the above 1,783.35 2,341.11

Actuarial assumptions and SensitivityI. Actuarial assumptions

Discount Rate (p.a.) 6.90% 7.67%Attrition rate 12.41 for age

upto 30, 8.21 for age 31-44,

0.21 for 44 and above

19.00 for age upto 35, 3.00

for age 36-45, 0.11 for 46 and

aboveExpected rate of return on plan assets (p.a.) - - Rate of Salary increase (p.a.) 7.00% 7.00%In-service Mortality Indian

Assured Lives Mortality (2012-

14)Ultimate

Indian Assured Lives

Mortality (2006-08)

UltimateII.

One percentage point increase in discount rate (896.43) (1,248.37) One percentage point decrease in discount rate 1,064.31 1,226.74 One percentage point increase in Salary growth rate 1,052.51 1,222.10 One percentage point decrease in Salary growth rate (903.42) (1,264.06)

III. Maturity profile of defined benefit obligationWithin 1 year 982.14 1,067.10 Between 1 and 5 years 4,002.93 4,050.08

Funded PlanGratuity

Year ended 31 March

Quantitative sensitivity analysis for impact of significantassumptions ondefined benefit obligation are as follows:

Employee benefits (Continued)Details of defined benefit plans as per actuarial valuation are as follows: (Continued)

166



Rs. in lakhs

36

37

38

Proceeds from issue of NCDs:Rs. in lakhs

Sr.No.



i) - 33,687.23 ii) - 181,012.24

Total - 214,699.47 - 2,100.00

Unsecured Subordinated Redeemable Non-Convertible Debentures (NCD's) of face value of Rs.1000/- each

Funds raised by issue of debt instruments through public issue

Employee benefits (Continued)

The net proceeds from the issue of these Notes were applied for the purpose of on-lending, in accordance with the approvals granted by the RBI and theECB Master Directions.

The Company's contribution to provident fund, superannuation fund and national pension scheme aggregating to Rs 6,806.72 lakhs (31 March 2019:Rs.4,186.75 lakhs) has been recognized in the Statement of profit and loss under the head Employee benefits expense.

During the year ended 31 March 2020, there was a revision in salary structure by reduction of basic pay with corresponding increase in variable pay ofemployees in certain grades made effective during the last quarter which resulted in reduction in valuation of defined benefit obligation on account ofgains recorded in past service cost amounting to Rs.1,091.19 lakhs and the same is netted against expenses recognized in Statement of Profit and Lossunder the head Employee Benefits Expense.

During the quarter and year ended 31 March 2020, the Company had raised funds in the overseas market amounting to Rs. 35,000.00 lakhs (equivalent toUSD 50 million) through issue of Rupee denominated USD settled, Secured Notes ("Masala Bonds") under External Commercial Borrowings (ECB)accessed through approval route requiring prior approval of RBI as per ECB Master directions. These are unlisted instruments, issued on 13 February2020 for total duration of 4 years, carrying a fixed coupon rate of 7.40%, repayable at par on maturity on 13 February 2024.

During the year ended 31 March 2020, there was no capital raised by issue of debt instruments through public issue.

Secured Redeemable Non-Convertible Debentures (NCD's) of face value of Rs.1000/- each

Pursuant to issuance of notification dated 16 August 2019 by MCA through the Companies (Share capital and Debentures) Amendment Rules, 2019, theDRR is no longer required for certain class of companies, including listed NBFCs registered with RBI under section 45-IA of the RBI Act, 1934, in thecase of public issue of debentures and privately placed debentures. Accordingly, the Company has not created any amount of DRR for the currentfinancial year and written-back an amount of Rs. 22,370.59 lakhs being the carrying amount of DRR created in the earlier years to Retained earnings as itis no longer required.

In terms of the requirements as per Section 71 (4) of the Companies Act, 2013 read with The Companies (Share capital and Debentures) Rules 2014,Rule no.18 (7) and applicable SEBI Issue and Listing of Debt Securities) Regulations, 2008, the Company has transferred Rs.14,667.61 lakhs toDebenture Redemption Reserve (DRR) on a prorata basis on total NCDs outstanding as at 31 March 2019, including the amount of fresh issuance duringthe year to create adequate DRR over the tenor of the debentures.

During the corresponding previous year ended 31 March 2019, the Company has raised an amount of Rs. 2,14,699.47 lakhs by way of Public Issuance ofSecured Redeemable Non-Convertible Debentures (NCD's) and Unsecured Subordinated Redeemable Non-Convertible Debentures of the face value ofRs.1,000.00 each. The NCD's issued during the previous year were allotted on 18 January 2019 and these were listed on the BSE. The entire amount ofproceeds from these issuances were used for the purposes as stated in its 'Placement Document' and there was no unutilized amount pertaining to theseissuances. The issue expenses of Rs.2100.00 lakhs has been adjusted against underlying NCD liabilities for amortization at effective interest rate over thetenor of respective NCDs as per the accounting policy. The details are as follows.

Particulars

Funds raised by issue of Rupee denominated USD settled, Secured Notes ("Masala Bonds")

The estimate of future salary increases, considered in actuarial valuation, considers inflation, seniority, promotion and other relevant factors, such assupply and demand in the employment market.

Accordingly, the Company had recognized a net gain of Rs.66.42 lakhs for the year ended 31 March 2020 (as against expenses of Rs.889.60 lakhs for theyear ended 31 March 2019) in the Statement of Profit and Loss under the head Employee Benefits Expense.

Details of defined benefit plans as per actuarial valuation are as follows: (Continued)

Issue expenses [adjusted against underlying NCD liabilities for amortization at effective interest rate over the tenor of respective NCDs]

The plan assets have been primarily invested in government securities and corporate bonds.

167



Rs. in lakhs

39i)

ii)

iii)

iv)

40

Regulatory capital

As at31 March 2020

As at31 March 2019

Tier - I capital 962,879.47 1,002,787.58 Tier - II capital 264,543.44 308,102.15 Total Capital 1,227,422.91 1,310,889.73 Aggregate of Risk Weighted Assets 6,248,547.10 6,464,867.86 Tier - I capital ratio 15.4% 15.5%Total Capital ratio 19.6% 20.3%

Capital management

The transaction was settled on 29 April 2020 in accordance with share subscription and shareholders' agreements to acquire a 49% stake inMIAMCPL and MTCPL by Manulife. The said agreements have also provided for sale of certain number of equity shares of MAMCPL by MMFSLat an agreed valuation within the overall stake divestment of 49% to Manulife. Accordingly, under the sale transaction, 1,47,00,000 equity shares ofMAMCPL, equivalent to 7% of the fully paid up equity share capital of MAMCPL, for a consideration of Rs. 2080.10 lakhs (equivalent to USD2.73 million), have been transferred in dematerialized form to Manulife.Consequent to the above, the shareholding of the Company in MAMCPL and MTCPL has come down from 100% to 51% of the share capitalrespectively, and accordingly, MAMCPL and MTCPL will cease to be wholly-owned subsidiaries of the Company but, continue to remain theCompany's subsidiaries w.e.f. 29 April 2020.In the Consolidated financial statements for the year ended 31 March 2020, MAMCPL and MTCPLhave been treated as 100% subsidiaries of the Company.

'The Company's capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same isdone through a mix of either equity and/or convertible and/or combination of short term /long term debt as may be appropriate.The company determines the amount of capital required on the basis of operations, capital expenditure and strategic investment plans. The capitalstructure is monitored on the basis of net debt to equity and maturity profile of overall debt portfolio.The Company is subject to the capital adequacy requirements of the Reserve Bank of India (RBI). Under RBI’s capital adequacy guidelines, theCompany is required to maintain a capital adequacy ratio consisting of Tier I and Tier II Capital. The total of Tier II Capital at any point of time, shall notexceed 100 percent of Tier I Capital. The minimum capital ratio as prescribed by RBI guidelines and applicable to the Company, consisting of Tier I andTier II capital, shall not be less than 15 percent of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet.

The Company has complied with all regulatory requirements related capital and capital adequacy ratios as prescribed by RBI.

Transactions in the nature of change in ownership in other entitiesPursuant to the offer made by National Housing Bank (NHB), the Board of Directors of the Company, at its meeting held on 27 March 2019, hadapproved the acquisition of 1,18,91,511 equity shares of Rs.10/- each of Mahindra Rural Housing Finance Limited, a subsidiary of the Company, ata premium of Rs. 231.16, for cash, aggregating to Rs. 28,677.57 lakhs. During the year ended 31 March 2020, the Company had settled the entireamount of obligation as per the terms and conditions of the agreement.The Company, on 21 June 2019, along with Mahindra Asset Management Company Private Limited (MAMCPL) and Mahindra Trustee CompanyPrivate Limited (MTCPL), wholly-owned subsidiaries of the Company, had entered in to a share subscription agreement and shareholders'agreement to form a 51:49 Joint Venture with Manulife Asset Management (Singapore) Pte. Ltd. (Manulife). Pursuant to these agreements,Manulife was required to make an equity investment aggregating to US $ 35.00 million to acquire 49% of the share capital of MAMCPL &MTCPL.

During the year ended 31 March 2020, the Company has entered in to a share subscription, share purchase and shareholders' agreement with IdealFinance Limited ("Ideal Finance") and its existing Shareholders to form and operate a Joint Venture in the financial services sector in Sri Lanka.Pursuant to these agreements, the Company has agreed to subscribe / acquire up to 58.20% of the Equity share capital of Ideal Finance, in one ormore tranches over a specified period of time, for an amount not exceeding Sri Lankan Rupees (LKR) 200.30 crores (equivalent to around Rs.80.12crores at foreign exchange rate of INR 1 to LKR 2.5). Upon acquisition of above stake, Ideal Finance will become a subsidiary of the Company. Aspart of this agreement, the Company has remitted an amount of Rs. 4,399.60 lakhs (equivalent to LKR 11,000.00 lakhs) to Ideal Finance towardsacquisition of 38.20% of the Equity share capital under first and second tranches as prescribed in these agreements.

During the year ended 31 March 2020,, the Company had incorporated a Wholly-owned subsidiary company, namely, Mahindra Finance CSRFoundation, under the provisions of section 8 of the Companies Act, 2013 for undertaking the CSR activities of the Company and its subsidiaries.

The Reserve Bank of India vide its circular reference RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13 March 2020 outlinesthe regulatory guidance in relation to Ind AS financial statements from financial year 2019-20 onwards. This included guidance for computation of‘owned funds’ , ‘net owned funds’ and ‘regulatory capital’. Accordingly, the ‘regulatory capital’ as of 31 March 2020 has been computed in accordancewith these requirements read with the requirements of the Master Direction DNBR. PD. 008/03.10.119/2016-17 dated September 01, 2016 (as amended).The ‘regulatory capital’ as of 31 March 2019 as disclosed in the comparative period numbers below was computed based on the carrying values asreflected in the financial statements prepared in accordance with requirements of Ind AS.

168



Rs. in lakhs

40Regulatory capital (Continued)

41

Capital management (Continued)

“Tier I Capital” means owned fund as reduced by investment in shares of other non-banking financial companies and in shares, debentures, bonds,outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same groupexceeding, in aggregate, ten per cent of the owned fund.“owned fund” means paid up equity capital, preference shares which are compulsorily convertible into equity, free reserves, balance in share premiumaccount and capital reserves representing surplus arising out of sale proceeds of asset, excluding reserves created by revaluation of asset, as reduced byaccumulated loss balance, book value of intangible assets and deferred revenue expenditure, if any.“Tier II capital” includes the following -(a) preference shares other than those which are compulsorily convertible into equity;(b) revaluation reserves at discounted rate of fifty five percent;(c) General provisions (including that for Standard Assets) and loss reserves to the extent these are not attributable to actual diminution in value oridentifiable potential loss in any specific asset and are available to meet unexpected losses, to the extent of one and one fourth percent of risk weightedassets(d) hybrid debt capital instruments; and(e) subordinated debt to he extend the aggregate does not exceed Tier I capital.Aggregate Risk Weighted Assets -Under RBI Guidelines, degrees of credit risk expressed as percentage weightages have been assigned to each of the on-balance sheet assets and off-balance sheet assets. Hence, the value of each of the on-balance sheet assets and off- balance sheet assets requires to be multiplied by the relevant riskweights to arrive at risk adjusted value of assets. The aggregate shall be taken into account for reckoning the minimum capital ratio.

LeasesI) In the cases where assets are taken on operating lease (as lessee) - As a lessee, the Company’s lease asset class primarily consist of buildings or part thereof taken on lease for office premises and certain IT equipmentsused for operating activities. The Company, previously classified these leases as operating leases under Ind AS 17 based on its assessment that the lessoreffectively retained substantially all the risks and benefits incidental to ownership of the underlying asset and hence, the lease payments were recognizedas an expense in the Statement of profit and loss.

The following is the summary of practical expedients elected on initial application of Ind AS 116.

c) Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application;

b) Availed the exemption not to recognize ROU assets and liabilities for leases of low value assets and leases with less than 12 months (short-term lease)of lease term on the date of initial application;

The Company has adopted Ind AS 116, Leases, effective 1 April 2019 using modified retrospective approach of transition without restating the figuresfor prior periods. Consequently, the Company has recognized the lease liability at the present value of the future lease payments discounted at theincremental borrowing rate at the date of initial application and ROU asset is equal to lease liability adjusted by the amount of any prepaid or accruedlease payments in relation to leases which has been previously classified as operating leases under Ind AS 17 subject to certain practical expedients asallowed by the Standard.

a) Applied a single discount rate to a portfolio of leases with reasonably similar characteristics;

d) Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied only to contractsthat were previously identified as leases under Ind AS 17.e) Used hindsight to determine the lease term of contracts.The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate asat 1 April 2019. The weighted average of Company’s incremental borrowing rate applied to the lease liabilities on 1 April 2019 was 9.00%.

169



Rs. in lakhs

41

Rs. in lakhs 30,840.74 20,680.84 2,233.34 18,447.50

Rs. in lakhs 5,463.47 8,254.41 5,387.71 4,582.31 23,687.90

i) 4,704.38 ii) 1,463.00 iii) 2,476.16 iv) 1,264.94 v) 3,812.25 vi) 4,245.13 vii)

17,988.25 viii) 18,880.38

Leases (Continued)I) In the cases where assets are taken on operating lease (as lessee) - (Continued)

Rs. in lakhsAmount for the year ended

/ As at 31 March 2020

Depreciation charge for Right-Of-Use assets for Leasehold premises (presented under note - 31 "Depreciation, amortization and impairment")Interest expense on lease liabilities (presented under note - 28 "Finance costs")

Key terms of the lease are as below :i) New vehicles to retail customers for a maximum period of 48 months with a minimum holding period of 24 months. ii) Used and refurbished vehicles to travel operators / taxi aggregators with a initial agreement validity period of 36 months to 48 months and provisionfor extension for such period and on such terms and conditions as may be agreed by both the parties. The lease agreement also provides for minimumlock in period 6 months from the date of execution and cancellation with 3 months' notice from either parties. The consideration payable by the lessee iseither minimum commitment charges or variable rental charges based on usage, make/model of the vehicle and certain other terms and conditionsforming part of the lease agreement.

The Company is not required to make any adjustments on transition to Ind AS 116 for leases in which it acts as a lessor. The Company accounted for itsleases in accordance with Ind AS 116 from the date of initial application. The Company does not have any sub-lease transactions.

b) Maturity Analysis - Contractual Undiscounted Cash Flow as at 31 March 2020:

Less than 1 year1 - 3 years

Less:- Adjustments for recognizing exemption for short term leases

II) In the cases where assets are given on operating lease (as lessor) -

Operating lease commitments as per Ind AS 17 as at 31 March 2019Present value of above lease commitment, using incremental borrowing rate as on 01 April 2019

Lease liabilities recognized as at 1 April 2019

Rental income arising from these operating leases is accounted for on a straight-line basis over the lease terms and is included in rental income in theStatement of profit and loss. Costs, including depreciation, incurred in earning the lease income are recognized as an expense.

3 - 5 yearsMore than 5 yearsTotal undiscounted lease liabilities as at 31 March 2020

- Property taken on lease for office premises (presented under note - 11 "Property, plant and equipments")

Expense relating to short-term leases (included in Rent expenses under note 32 " Other expenses")Expense relating to leases of low-value assets (included in Rent expenses under note 32 " Other expenses")Payments for principal portion of lease liabilityAdditions to right-of-use assets during the yearCarrying amount of right-of-use assets at the end of the reporting period by class of underlying asset -

On application of Ind AS 116, the nature of expense has changed from lease rent in previous periods to depreciation cost for the ROU asset and financecost for interest accrued on lease liability. Ind AS 116 also provides for certain options and exemptions to recognize short-term lease payments andpayments for leases of low-value assets which are not included in the measurement of the lease liability and ROU asset as expense on a straight line basisover the lease term in the statement of profit or loss. Following table summarizes other disclosures including the note references for the expense, assetand liability heads under which certain expenses, assets and liability items are grouped in the financial statements.

c) Other disclosures:

Lease liabilities (presented under note - 20 "Other financial liabilities")

a) Transition date reconciliation as at 01 April 2019

170



Rs. in lakhs

41

Rs. in lakhsParticulars Year ended

31 March 2020Year ended

31 March 2019

i) New vehicles to retail customers on operating lease - Gross carrying amount 4,925.95 13.75 Depreciation for the year 396.21 0.74 Accumulated Depreciation 427.88 13.02 ii) Used and refurbished vehicles to travel operators / taxi aggregators - Gross carrying amount 358.71 63.40 Depreciation for the year 42.62 0.30 Accumulated Depreciation 56.49 63.10

The total future minimum lease rentals receivable for the non-cancellable lease period as at the Balance sheet date is as under:Rs. in lakhs

Particulars As at31 March 2020

As at31 March 2019

i) New vehicles to retail customers on operating lease - Not later than one year 1,451.45 357.77 Later than one year but not later than five years 3,578.70 1,253.64 Later than five years - -

5,030.15 1,611.41 ii) Used and refurbished vehicles to travel operators / taxi aggregators - Not later than one year 50.92 37.55 Later than one year but not later than five years 33.71 29.07 Later than five years -

84.63 66.62

42

43

Leases (Continued)II) In the cases where assets are given on operating lease (as lessor) - (Continued)

There is no separate reportable segment as per Ind AS 108 on 'Operating Segments' in respect of the Company.The Company operates in single segment only. There are no operations outside India and hence there is no external revenue or assets which requiredisclosure.

Since there is no contingent rent applicable in respect of these lease arrangements, the Company has not recognized any income as contingent incomeduring the year.

Other details are as follows:

No revenue from transactions with a single external customer amounted to 10% or more of the Company's total revenue in year ended 31 March 2020 or31 March 2019 .

Operating segments

Frauds reported during the yearThere were 101 cases (31 March 2019: 123 cases) of frauds amounting to Rs.285.03 lakhs (31 March 2019: Rs.768.18 lakhs) reported during the year.The Company has recovered an amount of Rs.70.62 lakhs (31 March 2019: Rs.76.20 lakhs) and has initiated appropriate legal actions against theindividuals involved. The claims for the un-recovered losses have been lodged with the insurance companies on merit basis.

171



Rs. in lakhs

44Rs. in lakhs

31 March 2020

31 March 2019

i) Contingent liabilities Claims against the Company not acknowledged as debts 14,434.27 22,174.97 Guarantees 111,742.35 51,236.91

126,176.62 73,411.88 ii) Commitments Estimated amount of contracts remaining to be executed on capital account and not provided for 1,316.59 500.03 Other commitments (loan sanctioned but not disbursed) 23,945.91 34,199.41

25,262.50 34,699.44 Total 151,439.12 108,111.32

45Transferred financial assets that are not derecognized in their entirety

Rs. in lakhsParticulars 31 March

2020 31 March 2019

Securitizations - Carrying amount of transferred assets measured at amortized cost 885,523.52 431,200.15 Carrying amount of associated liabilities 888,170.82 434,734.49 Fair value of transferred assets (A) 876,973.52 362,188.41 Fair value of associated liabilities (B) 816,917.73 413,225.89 Net position (A-B) 60,055.79 (51,037.48)

Transfer of financial assets

The Company’s pending litigations comprise of claims against the Company primarily by the customers and proceedings pending with Income Tax,sales tax / VAT and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for whereprovisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The amount of provisions / contingentliabilities is based on management’s estimate, and no significant liability is expected to arise out of the same.

The following table provide a summary of financial assets that have been transferred in such a way that part or all of the transferred financial assets donot qualify for derecognition, together with the associated liabilities:

Contingent liabilities and commitments (to the extent not provided for)

The Company has transferred certain pools of fixed rate loan receivables backed by underlying assets in the form of tractors, vehicles, equipments etc. byentering in to securitization transactions with the Special Purpose Vehicle Trusts ("SPV Trust") sponsored by Commercial banks for considerationreceived in cash at the inception of the transaction.The Company, being Originator of these loan receivables, also acts as Servicer with a responsibility of collection of receivables from its borrowers anddepositing the same in Collection and Payout Account maintained by the SPV Trust for making scheduled payouts to the investors in Pass ThoughCertificates (PTCs) issued by the SPV Trust. These securitization transactions also requires the Company to provide for first loss credit enhancement invarious forms, such as corporate guarantee, cash collateral, subscription to subordinated PTCs. as credit support in the event of shortfall in collectionsfrom underlying loan contracts. By virtue of existence of credit enhancement, the Company is exposed to credit risk, being the expected losses that willbe incurred on the transferred loan receivables to the extent of the credit enhancement provided.

In view of the above, the Company has retained substantially all the risks and rewards of ownership of the financial asset and thereby does not meet therecognition criteria as set out in Ind AS 109. Consideration received in this transaction is presented as "Associated liability related to Securitizationtransactions" under Note no.17.

Clarification on applicability of allowances for provident fund contributions under Employees Provident Fund Act, 1952In February 2019, the Supreme Court of India in its judgement clarified the applicability of allowances that should be considered to measure obligationsunder Employees Provident Fund Act, 1952. The Company has been legally advised that there are interpretative challenges on the application ofjudgement retrospectively and as such does not consider there is any probable obligations for past periods. Accordingly, based on legal advice, theCompany has made a provision for provident fund contribution from the date of the Supreme Court order and continued to remit the contribution on same basis.

172



Rs. in lakhs

46

a) Gross amount required to be spent by the Company during the year is Rs.2280.16 lakhs (31 March 2019: Rs. 2,681.34 lakhs).b) Amount spent by the Company during the year :

Rs. in lakhs

Particulars In cash Yet to be paid in cash

Total In cash Yet to be paid in cash

Total

i) Construction / acquisition of any asset - - - - - - ii) On purpose other than (i) above 2,797.36 - 2,797.36 2,687.30 - 2,687.30

47

48

49Rs. in lakhs

Particulars 31 March 2019

Cash flows(net)

Exchangedifference

Amortization of loan

origination costs

New leases (including

transition to Ind AS 116)

31 March 2020

Debt securities 2,231,937.92 (456,151.40) - (1,298.79) - 1,774,487.73 Borrowings (Other than debt securities) 2,130,153.03 797,802.95 19,173.16 1,605.13 - 2,948,734.27 Deposits 566,718.41 313,823.92 - 671.65 - 881,213.98 Subordinated liabilities 355,883.82 (13,976.88) - (112.37) - 341,794.57 Lease liabilities - (3,812.25) - - 22,692.63 18,880.38 Dividend paid (including tax on dividend) - (47,786.03) - - - - Total 5,284,693.18 589,900.31 19,173.16 865.62 22,692.63 5,965,110.93

Rs. in lakhs Particulars 31 March

2018 Cash flows

(net) Exchangedifference

Amortization of loan

origination costs

31 March 2019

Debt securities 2,034,509.13 200,429.64 - (3,000.85) 2,231,937.92 Borrowings (Other than debt securities) 1,338,913.59 788,705.24 826.29 1,707.91 2,130,153.03 Deposits 312,480.07 256,150.55 - (1,912.21) 566,718.41 Subordinated liabilities 323,413.03 32,707.23 - (236.44) 355,883.82 Dividend paid (including tax on dividend) - (29,378.43) - - - Total 4,009,315.82 1,248,614.23 826.29 (3,441.59) 5,284,693.18



During the year ended 31 March 2020, the Company had made a contribution of Rs.600.00 lakhs (31 March 2019: 240.00 lakhs) to New DemocraticElectoral Trust, a Trust approved by the Central Board of Direct Taxes under Electoral Trust Scheme, 2013 to enable Electoral Trust to makecontributions to political party/parties duly registered with the Election Commission, in such manner and at such times as it may decide from time totime. This contribution was as per the provisions of section 182 of the Companies Act, 2013.

The Company has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. Atthe year end, the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeablelosses on such long term contracts (including derivative contracts) has been made in the books of accounts.

Corporate Social Responsibility (CSR)During the year ended 31 March 2020, the Company has incurred an expenditure of Rs.2,533.54 lakhs (31 March 2019 : Rs. 2,502.95 lakhs) towardsCSR activities which includes contribution / donations made to the trusts which are engaged in activities prescribed under section 135 of the CompaniesAct, 2013 read with Schedule VII to the said Act and expense of Rs.246.08 lakhs (31 March 2019: Rs. 168.56 lakhs) towards the CSR activitiesundertaken by the Company.Detail of amount spent towards CSR activities :

For the year ended 31 March 2020 For the year ended 31 March 2019

The above expenditure includes Rs.17.74 lakhs (31 March 2019: Rs.15.79 lakhs) as salary cost in respect of certain employees who have beenexclusively engaged in CSR administrative activities which qualifies as CSR expenditure under section 135 of the Companies Act, 2013.

Reconciliation of movement of liabilities to cash flows arising from financing activities

173


50

50.1

a)

b)

The carrying amounts of the Company’s foreign currency exposure at the end of the reporting period are as follows :Rs. in lakhs

US Dollar Euro TotalAs at 31 March 2020Financial Assets - - - Financial Liabilities 272,141.24 19,931.66 292,072.90 As at 31 March 2019Financial Assets - - - Financial Liabilities 82,052.52 118,748.22 200,800.74

Foreign Currency Sensitivity

Rs. in lakhsCurrency Change in rate Effect on Profit

Before TaxYear ended 31 March 2020 INR/EUR (+/-) 1.00% (+/-) 199.32

INR/USD (+/-) 1.00% (+/-) 2,721.41Year ended 31 March 2019 INR/EUR (+/-) 0.31% (+/-) 371.85

INR/USD (+/-) 0.50% (+/-) 407.98

Pricing Risk

Market the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates,foreign exchange rates, etc. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilemaximizing the return.

The Company's Investment in Mutual Funds is exposed to pricing risk. Other financial instruments held by the company does not possess any riskassociated with trading. A 5 percent increase in Net Assets Value (NAV) would increase profit before tax by approximately Rs 16,206.00 lakhs (31stMarch 2019 : Rs 3,177.00 lakhs ). A similar percentage decrease would have resulted equivalent opposite impact.

Currency Risk

The following tables demonstrate the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant.

Currency Risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk arise majorlyon account of foreign currency borrowings. The Company's foreign currency exposures are managed in accordance with its Foreign Exchange RiskManagement Policy which has been approved by its Board of Directors. Company manages its foreign currency risk by entering into forward contract andcross currency swaps.


Rs. in lakhs

Board of Directors of the Company have established Asset and Liability Management Committee (ALCO), which is responsible for developing andmonitoring risk management policies for its business. The Company's financial services businesses are exposed to high credit risk given the unbanked ruralcustomer base and diminishing value of collateral. The credit risk is managed through credit norms established based on historical experience.

Financial Risk Management Framework

Market Risk

In the course of its business, the Company is exposed to certain financial risks namely credit risk, interest risk, currency risk & liquidity risk. TheCompany's primary focus is to achieve better predictability of financial markets and seek to minimize potential adverse effects on its financial performance.

The financial risks are managed in accordance with the Company’s risk management policy which has been approved by its Board of Directors.

174



Rs. in lakhs

5050.1

c)

Interest Rate risk on variable rate borrowings is managed by way of interest rate swaps.

Rs. in lakhsCurrency Increase / decrease in

basis pointsEffect on profit

before taxYear ended 31 March 2020 INR 270 42,114.28 Year ended 31 March 2019 INR 150 19,232.85

d) Off-setting of balances

Financial assets subject to offsettingRs. in lakhs

Gross assets before offset

Financial liabilities netted

Assets recognized in balance sheet

Loan assetsAt 31 March' 2020 6,509,154.82 9,802.78 6,499,352.04 At 31 March' 2019 6,135,483.82 10,521.02 6,124,962.80

Financial liabilities subject to offsettingRs. in lakhs

Gross liabilities before offset


Liabilities recognized in balance sheet

Other financial liabilitiesAt 31 March' 2020 241,198.81 9,802.78 231,396.03 At 31 March' 2019 203,183.97 10,521.02 192,662.95

The table below summarizes the financial liabilities offsetted against financial assets and shown on a net basis in the balance sheet :

The sensitivity analyses below have been determined based on exposure to interest rate for both derivative and non-derivative instruments at the end ofreporting period. For floating rate liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the reporting period wasoutstanding for the whole year.The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With allother variables held constant, the company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

Particulars

Particulars Offsetting recognized on the balance sheet

Offsetting recognized on the balance sheet

Interest Rate Risk

Interest Rate sensitivity

Financial Risk Management Framework (Continued)

The company uses a mix of cash and borrowings to manage the liquidity & fund requirements of its day-to-day operations. Further, certain interest bearingliabilities carry variable interest rates.

Market Risk (Continued)

175


5050.2 Credit Risk Management

Credit Quality of Financial Loans and Investments

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of Retail loansNeither Past due nor impaired 4,949,484.43 4,573,022.06 Past Due but not impaired30 days past due 329,835.14 399,846.71 31-90 days past due 616,208.94 517,380.10 Impaired (more than 90 days) 548,449.65 383,898.47 Total Gross carrying value as at reporting date 6,443,978.16 5,874,147.34

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of SME loans including Bills of exchangeNeither Past due nor impaired 162,662.60 190,390.41 Past Due but not impaired30 days past due 49,797.19 38,294.97 31-90 days past due 7,849.04 3,247.19 Impaired (more than 90 days) 19,298.01 17,655.41 Total Gross carrying value as at reporting date 239,606.84 249,587.98

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of Trade AdvancesLess than 60 days past due 96,383.29 178,777.59 61-90 days past due 21,149.54 3,134.21 Impaired (more than 90 days) 6,402.06 5,518.76 Total Gross carrying value as at reporting date 123,934.89 187,430.56

Rs. in lakhsParticulars 31 March 2020 31 March 2019

Neither Past due nor impaired 112,958.95 120,477.05 Past Due but not impaired30 days past due - - 31-90 days past due - - Impaired (more than 90 days) - -

Total Gross carrying value as at reporting date 112,958.95 120,477.05


Rs. in lakhs


Gross carrying value of Financial Investments measured at amortised cost

Credit risk is the risk that the Company will incur a loss because its customers fail to discharge their contractual obligations. The Company has acomprehensive framework for monitoring credit quality of its retail and other loans primarily based on Days past due monitoring at period end.Repayment by individual customers and portfolio is tracked regularly and required steps for recovery are taken through follow ups and legal recourse.

The Company reviews the credit quality of its loans based on the ageing of the loan at the period end. Since the company is into retail lending business,there is no significant credit risk of any individual customer that may impact company adversely, and hence the Company has calculated its ECLallowances on a collective basis.

The following table sets out information about credit quality of loans and investments measured at amortized cost based on days past due information.The amount represents gross carrying amount.

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Financial Risk Management Framework (Continued)50.2 Credit Risk Management (Continued)

Inputs considered in the ECL model

(i)

(ii)

(iii)

(iv)

The Company considers a financial asset to be in "default" and therefore Stage 3 (credit impaired) for ECL calculations when the borrower becomes 90days past due on its contractual payments.

Exposure at default"Exposure at Default" (EAD) represents the gross carrying amount of the assets subject to impairment calculation. Future Expected Cash flows(Principal and Interest) for future years has been used as exposure for Stage 2.

The Company categorizes loan assets into stages primarily based on the Months Past Due status. Stage 1 : 0-30 days past dueStage 2 : 31-90 days past dueStage 3 : More than 90 days past due

Definition of default

RBI COVID-19 Regulatory PackageIn accordance with the Reserve Bank of India (RBI) notification no. RBI/2019-20/186 DOR.No.BP.BC.47/21.04.048/2019-20 dated 27th March, 2020and RBI/2019-20/220 DOR.No.BP.BC.63/21.04.048/2020-21 dated April 17, 2020 relating to ‘COVID-19 - Regulatory Package’, the Company, as perits board approved policy and ICAI advisories, has granted moratorium upto three months on the payment of installments falling due between March 1,2020 and May 31, 2020 to all eligible borrowers. And in respect of accounts overdue but standard (i.e, stage 1 and stage 2) at 29 February 2020 wheremoratorium benefit has been granted, for the purpose of staging of those accounts and for determination of impairment loss allowance as at 31 March2020, the days past due status as on 29 February 2020 has been considered.

Impact of COVID-19

While the methodologies and assumptions applied in the impairment loss allowance calculations remained unchanged from those applied whilepreparing the financial results for the period ended March 2019, the Company has separately incorporated estimates, assumptions and judgementsspecific to the impact of the COVID-19 pandemic and the associated support packages in the measurement of impairment loss allowance and hasrecognized an overlay in the statement of profit and loss. The Company’s impairment loss allowance estimates are inherently uncertain and, as a result,actual results may differ from these estimates.

In assessing the impairment of financial loans under Expected Credit Loss (ECL) Model, the assets have been segmented into three stages. The threestages reflect the general pattern of credit deterioration of a financial instrument. The differences in accounting between stages, relate to the recognitionof expected credit losses and the measurement of interest income.

The company applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetimeexpected loss provision for trade advances. The Company has computed expected credit losses based on a provision matrix which uses historical creditloss experience of the company.

The impact of COVID-19 on the global economy and how governments, businesses and consumers respond is uncertain. This uncertainty is reflected inthe Company’s assessment of impairment loss allowance on its loans which are subject to a number of management judgements and estimates. Inrelation to COVID-19, judgements and assumptions include the extent and duration of the pandemic, the impacts of actions of governments and otherauthorities, and the responses of businesses and consumers in different industries, along with the associated impact on the global economy.

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Inputs considered in the ECL model (Continued)(v)

(vi)

(vii)

(viii)

(ix)

Estimations and assumptions considered in the ECL modelThe Company has made the following assumptions in the ECL Model:a. "Loss given default" (LGD) is common for all three Stages and is based on loss in past portfolio. Actual cash flows on the past portfolio arediscounted at portfolio EIR rate for arriving loss rate.b. "Probability of Default" (PD) is applied on Stage 1 and Stage 2 on portfolio basis and for Stage 3 PD at 100%. This is calculated as an average of thelast 60 months yearly movement of default rates and future adjustment for macro-economic factor.Measurement of ECLECL is measured as follows:- financial assets that are not credit impaired at the reporting date: for Stage 1, gross exposure is multiplied by PD and LGD percentage to arrive at theECL. For Stage 2, future Expected Cash flows (Principal and Interest) for respective future years is multiplied by respective years Marginal PDs andLGD percentage and thus arrived ECL is then discounted with the respective loan EIR to calculate the present value of ECL. In addition, in case of Billsdiscounting and Channel finance, as the average lifetime is of 90 days, a time to maturity factor of 0.25 is used in the ECL computation.- financial assets that are credit impaired at the reporting date: the difference between the gross exposure at reporting date and computed carryingamount considering EAD net of LGD and actual cash flows till reporting date;- undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Company if the commitmentis drawn down and the cash flows that the Company expects to receive.

Assessment of significant increase in credit risk

Additionally, three different scenarios have been considered for ECL calculation. Along with the actual numbers (considered for Base case scenario),other scenarios take care of the worsening as well as improving forward looking economic outlook. As at 31 March 2020, the probability assigned tobase case scenario assumptions have been updated to reflect the rapidly evolving situation with respect to Covid-19. This includes an assessment of theeffectiveness of stimulus packages announced by government and regulatory measures imparted by RBI. These are considered in determining the lengthand severity of the forecast economic downturn. The Company's base case economic forecast scenarios reflects a deterioration in economic conditionsin the first quarter with a gradual improvement thereafter. In addition to the base case forecast which reflects largely the negative economicconsequences of COVID-19, greater weighting has been applied to the downside scenarios given the Company’s assessment of downside risks.

- A Stage 3 customer having other loans which are in Stage 1 or 2.- Customers who have failed to pay their first EMI.- Physical verification status of the repossessed asset related to the loan.- Cases where Company suspects fraud and legal proceedings are initiated.

Policy for write off of Loan AssetsThe gross carrying amount of a financial asset is written off when there is no realistic prospect of further recovery. This is generally the case when theCompany determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject tothe write- off. However, financial assets that are written off could still be subject to enforcement activities under the Company’s recovery procedures,taking into account legal advice where appropriate. Any recoveries made from written off assets are netted off against the amount of financial assetswritten off during the year under "Bad debts and write offs" forming part of "Impairment on financial instruments" in Statement of profit and loss.

Forward Looking Information

Based on the assessment by the Company, the RBI moratorium relaxation offered to the customers recognizing the potential detrimental impact ofCOVID-19 has not been deemed to be automatically triggering significant increase in credit risk. The Company continues to recognize interest incomeduring the moratorium period and in the absence of other credit risk indicators, the granting of a moratorium period does not result in accountsbecoming past due and automatically triggering Stage 2 or Stage 3 classification criteria.As a part of the qualitative assessment of whether a customer is in default, the Company also considers a variety of instances that may indicateunlikeliness to pay. In such instances, the Company treats the customer at default and therefore assesses such loans as Stage 3 for ECL calculations,following are such instances:

Historical PDs has been converted into forward looking PD which incorporates the forward looking economic outlook. Considering that major chunk ofborrowers in the retail portfolio is from rural area, Agriculture (real change % p.a.) is used as a macroeconomic variable. Agriculture (real change %p.a.) stands for Percentage change in real agricultural value-added, including livestock, forestry and fishing, over previous year). In case of SME andBills Discounting portfolio, Real GDP (% change pa) is used as the macroeconomic variable. The macroeconomic variables considered by the Company are robust reflections of the state of economy which result into systematic risk for therespective portfolio segments.

When determining whether the credit risk has increased significantly since initial recognition, the Company considers both quantitative and qualitativeinformation and analysis based on the Company’s historical experience, including forward-looking information. The Company considers reasonable andsupportable information that is relevant and available without undue cost and effort. The Company's accounting policy is not to use the practicalexpedient that the financial assets with 'low' credit risk at the reporting date are deemed not to have had a significant increase in credit risk. As a resultthe Company monitors all financial assets and loan commitments that are subject to impairment for significant increase in credit risk.

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Inputs considered in the ECL model (Continued)(x)

Year Upside Base Downside% % %

Probability Assigned 0 70 30Agriculture ( % real change p.a) 2020 5.7 3.5 1.3

2021 5.4 3.2 1.02022 5.6 3.4 1.22023 5.5 3.3 1.12024 6.0 3.8 1.6

Real GDP ( % change p.a) 2020 7.7 6.7 5.72021 7.8 6.8 5.82022 7.7 6.7 5.72023 7.5 6.5 5.52024 7.4 6.4 5.4

Impairment lossThe expected credit loss allowance provision for Retail Loans is determined as follows:

Rs. in lakhsPerforming Loans -

12 month ECLUnderperforming

loans - 'lifetime ECL not credit

impaired'

Impaired loans - 'lifetime ECL

credit impairedTotal

Gross Balance as at 31 March 2020 5,279,319.57 616,208.94 548,449.65 6,443,978.16 Expected credit loss rate 1.02% 11.75% 28.31%Carrying amount as at 31 March 2020 (net of impairment provision) 5,225,486.63 543,814.52 393,173.26 6,162,474.42 Gross Balance as at 31 March 2019 4,972,868.77 517,380.10 383,898.47 5,874,147.34 Expected credit loss rate 1.03% 11.01% 16.81%Carrying amount as at 31 March 2019 (net of impairment provision) 4,921,882.98 460,420.12 319,347.75 5,701,650.84

The expected credit loss allowance provision for SME Loans including Bills of exchange is determined as follows:Rs. in lakhs

Performing Loans - 12 month ECL

Underperforming loans - 'lifetime ECL not credit

impaired'



Gross Balance as at 31 March 2020 212,459.79 7,849.04 19,298.01 239,606.84 Expected credit loss rate 0.23% 27.21% 82.00%Carrying amount as at 31 March 2020 (net of impairment provision) 211,968.51 5,713.58 3,474.14 221,156.24 Gross Balance as at 31 March 2019 228,685.38 3,247.19 17,655.41 249,587.98 Expected credit loss rate 0.12% 2.61% 38.96%Carrying amount as at 31 March 2019 (net of impairment provision) 228,405.73 3,162.59 10,776.65 242,344.98

The expected credit loss allowance provision for Trade Advances is determined as follows:Rs. in lakhs

Less than 60 days past due

61-90 days past due

Credit impaired (more than 90

days)Total

Gross Balance as at 31 March 2020 96,383.28 21,149.54 6,402.06 123,934.89 Expected credit loss rate 0.40% 6.77% 100.00%Carrying amount as at 31 March 2020 (net of impairment provision) 95,997.75 19,718.61 - 115,716.36 Gross Balance as at 31 March 2019 178,777.59 3,134.21 5,518.76 187,430.56 Expected credit loss rate 0.40% 7.33% 100.00%Carrying amount as at 31 March 2019 (net of impairment provision) 178,062.48 2,904.49 - 180,966.97

The below table shows the values of the forward looking macro economic variable used in each of the scenarios for the ECL calculations. For this purpose, the Company has used the data source of Economist Intelligence Unit. The upside and downside % change has been derived using historical standard deviation from the base scenario based on previous 8 years change in the variable.

Analysis of inputs to the ECL model with respect to macro economic variable

ECL scenario for Macro Economic Variable

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50.2 Credit Risk Management (Continued)The expected credit loss allowance provision for Financial Investments measured at amortized cost is determined as follows:

Rs. in lakhsPerforming Loans -

12 month ECLUnderperforming

loans - 'lifetime ECL not credit

impaired'



Gross Balance as at 31 March 2020 112,958.95 - - 112,958.95 Expected credit loss rate 0.12%Carrying amount as at 31 March 2020 (net of impairment provision) 112,822.76 112,822.76 Gross Balance as at 31 March 2019 120,477.05 - - 120,477.05 Expected credit loss rate 0.24%Carrying amount as at 31 March 2019 (net of impairment provision) 120,194.53 - - 120,194.53

An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to Retail Loans is, as follows :Gross exposure reconciliationAs at 31 March 2020

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2019 4,972,868.77 517,380.10 383,898.47 5,874,147.34 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 136,418.58 (112,758.71) (23,659.87) - - Transfers to Stage 2 (515,583.82) 528,647.95 (13,064.13) - - Transfers to Stage 3 (197,300.63) (125,390.74) 322,691.37 - - Loans that have been derecognized during the period (489,909.75) (76,625.39) (82,173.29) (648,708.43) New loans originated during the year 2,686,576.49 79,956.70 26,066.66 2,792,599.85 Write-offs (1.86) (18.00) (33,598.54) (33,618.40) Remeasurement of net exposure (1,313,748.21) (194,982.97) (31,711.02) (1,540,442.20) Gross carrying amount balance as at 31 March 2020 5,279,319.57 616,208.94 548,449.65 6,443,978.16

As at 31 March 2019Rs. in lakhs

Particulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2018 3,863,531.16 466,067.48 487,361.73 4,816,960.37 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 137,506.90 (104,222.42) (33,284.47) - - Transfers to Stage 2 (354,349.96) 380,486.46 (26,136.50) - - Transfers to Stage 3 (118,290.12) (70,194.12) 188,484.25 - - Loans that have been derecognized during the period (432,819.07) (75,231.15) (109,024.24) (617,074.46) New loans originated during the year 2,947,806.74 100,031.11 44,312.98 3,092,150.83 Write-offs (138.14) (1,198.79) (116,927.08) (118,264.01) Remeasurement of net exposure (1,070,378.74) (178,358.47) (50,888.18) (1,299,625.39) Gross carrying amount balance as at 31 March 2019 4,972,868.77 517,380.10 383,898.47 5,874,147.34

Reconciliation of ECL balanceAs at 31 March 2020

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2019 50,985.79 56,959.98 64,550.72 172,496.50 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 16,392.25 (12,413.96) (3,978.30) - - Transfers to Stage 2 (5,286.17) 7,482.85 (2,196.67) - - Transfers to Stage 3 (2,022.88) (13,804.66) 15,827.54 - - Loans that have been derecognized during the period (5,022.94) (8,435.93) (13,817.05) (27,275.92) New loans originated during the year 24,539.86 9,113.32 6,329.97 39,983.15 Write-offs (0.02) (1.98) (30,993.32) (30,995.32) Net remeasurement of loss allowance (25,752.95) 33,494.79 119,553.49 127,295.33 ECL allowance balance as at 31 March 2020 53,832.94 72,394.42 155,276.38 281,503.74

Level of Assessment - Aggregation CriteriaThe company recognizes the expected credit losses (ECL) on a collective basis that takes into account comprehensive credit risk information. Considering the economic and risk characteristics, pricing range, sector concentration (e.g. vehicle loans in unorganized sectors) the company calculatesECL on a collective basis for all stages - Stage 1, Stage 2 and Stage 3 assets.

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Rs. in lakhs


Reconciliation of ECL balance (Continued)As at 31 March 2019

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 48,600.95 74,547.72 159,267.36 282,416.03 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 27,547.63 (16,670.43) (10,877.20) - - Transfers to Stage 2 (4,457.51) 12,998.79 (8,541.28) - - Transfers to Stage 3 (1,488.02) (11,227.58) 12,715.60 - - Loans that have been derecognized during the period (5,444.61) (12,033.26) (35,628.57) (53,106.44) New loans originated during the year 30,222.17 11,012.74 13,263.87 54,498.78 Write-offs (1.74) (191.75) (88,849.18) (89,042.67) Net remeasurement of loss allowance (43,993.08) (1,476.25) 23,200.12 (22,269.21) ECL allowance balance as at 31 March 2019 50,985.79 56,959.98 64,550.72 172,496.50

Gross exposure reconciliationAs at 31 March 2020

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2019 228,685.38 3,247.19 17,655.41 249,587.98 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 4,636.64 (1,512.78) (3,123.86) - - Transfers to Stage 2 (5,961.16) 6,210.80 (249.64) (0.00) - Transfers to Stage 3 (3,218.85) (556.88) 3,775.73 - - Loans that have been derecognised during the period (98,112.98) (1,181.89) (2,599.30) (101,894.17) New loans originated during the year 176,770.61 4,499.39 5,018.60 186,288.60 Write-offs - - - - Net remeasurement of exposure (90,339.85) (2,856.78) (1,178.94) (94,375.57) Gross carrying amount balance as at 31 March 2020 212,459.79 7,849.04 19,298.01 239,606.84


Particulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2018 173,745.46 5,775.43 11,560.77 191,081.66 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 4,801.12 (2,331.50) (2,469.61) - - Transfers to Stage 2 (385.03) 390.68 (5.65) 0.00 - Transfers to Stage 3 (6,576.32) (1,451.36) 8,027.68 - - Loans that have been derecognized during the period (57,140.10) (999.69) (655.30) (58,795.09) New loans originated during the year 194,780.53 2,916.76 5,613.06 203,310.35 Write-offs (163.80) (685.88) (3,324.28) (4,173.97) Net remeasurement of exposure (80,376.47) (367.25) (1,091.26) (81,834.98) Gross carrying amount balance as at 31 March 2019 228,685.38 3,247.19 17,655.41 249,587.98

The contractual amount outstanding on financial assets that has been written off by the Company during the year ended 31 March 2020 and that werestill subject to enforcement activity was Rs 38,352.61 lakhs (31 March 2019 : Rs 1,18,264.00 lakhs ).The increase in ECL of the portfolio was driven by an increase in the gross size of the portfolio, movements between stages as a result of increases incredit risk and a deterioration in economic conditions, and management overlay of Rs 55,206.00 lakhs.An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to SME Loans including Bills of exchange is, asfollows :

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Rs. in lakhs



Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2019 279.65 84.59 6,878.76 7,243.00 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 1,649.55 (40.53) (1,609.02) - - Transfers to Stage 2 (1.08) 137.06 (135.98) - - Transfers to Stage 3 (6.54) (17.10) 23.64 - - Loans that have been derecognised during the period (41.44) (25.78) (726.64) (793.86) New loans originated during the year 256.85 50.52 4,039.87 4,347.25 Write-offs - - - - Net remeasurement of loss allowance (1,645.73) 1,946.69 7,353.24 7,654.20 ECL allowance balance as at 31 March 2020 491.26 2,135.46 15,823.87 18,450.59


Particulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 3,078.96 449.99 6,876.35 10,405.29 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 2,085.40 (191.27) (1,894.12) - - Transfers to Stage 2 (7.86) 9.07 (1.21) - - Transfers to Stage 3 (148.56) (154.92) 303.48 - - Loans that have been derecognized during the period 5.79 (32.16) (435.44) (461.80) New loans originated during the year 181.34 72.21 3,067.73 3,321.29 Write-offs (0.01) (42.60) (2,025.69) (2,068.29) Net remeasurement of loss allowance (4,915.42) (25.72) 987.66 (3,953.48) ECL allowance balance as at 31 March 2019 279.65 84.59 6,878.76 7,243.00


Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalOpening balance of outstanding exposure as at 1 April 2019 34,199.41 - - 34,199.41 New Exposures 23,945.91 - - 23,945.91 Exposure derecognized or matured/ lapsed ( excluding write-offs) (34,199.41) - - (34,199.41) - Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - Write-offs - - - - Net remeasurement of exposure - - - - Closing balance of outstanding exposure as at 31 March 2020 23,945.91 - - 23,945.91

The contractual amount outstanding on financial assets that has been written off by the Company during the year ended 31 March 2020 and that werestill subject to enforcement activity was nil (31 March 2019: Rs 4,051.38 lakhs).The increase in ECL of the portfolio was driven by movements between stages as a result of increases in credit risk and a deterioration in economicconditions and management overlay of Rs 2,195.05 lakhs.An analysis of changes in the outstanding exposure and the corresponding ECLs in relation to other undrawn commitments is as follows :

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Rs. in lakhs


Gross exposure reconciliation (Continued)As at 31 March 2019

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalOpening balance of outstanding exposure as at 1 April 2018 87,026.20 - - 87,026.20 New Exposures 34,199.41 - - 34,199.41 Exposure derecognized or matured/ lapsed ( excluding write-offs) (87,026.20) - - (87,026.20) - Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - Write-offs - - - - Net remeasurement of exposure - - - - Closing balance of outstanding exposure as at 31 March 2019 34,199.41 - - 34,199.41


Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2019 279.09 - - 279.09 New Exposures 114.01 - - 114.01 Exposure derecognized or matured/ lapsed ( excluding write-offs) (279.09) - - (279.09) - Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Loans that have been derecognized during the period - - - - Net remeasurement of loss allowance - - - - ECL allowance balance as at 31 March 2020 114.01 - - 114.01


Particulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 1,106.36 - - 1,106.36 New Exposures 279.09 - - 279.09 Exposure derecognized or matured/ lapsed ( excluding write-offs) (1,106.36) - - (1,106.36) - Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Loans that have been derecognized during the period - - - - Net remeasurement of loss allowance - - - - ECL allowance balance as at 31 March 2019 279.09 - - 279.09

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Rs. in lakhs



Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2019 120,477.05 - - 120,477.05 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognized during the period (50,107.82) - - (50,107.82) New Investments originated during the year 43,494.80 - - 43,494.80 Write-offs - - - Net remeasurement of same stage continuing investments (905.08) - - (905.08) Gross carrying amount balance as at 31 March 2020 112,958.95 - - 112,958.95


Particulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2018 204,843.85 - - 204,843.85 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognized during the period (58,415.02) - - (58,415.02) New Investments originated during the year 31,115.10 - - 31,115.10 Write-offs - - - Net remeasurement of same stage continuing investments (57,066.88) - - (57,066.88) Gross carrying amount balance as at 31 March 2019 120,477.05 - - 120,477.05


Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2019 282.52 - - 282.52 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognized during the period (245.20) - - (245.20) New Investments originated during the year 108.26 - - 108.26 Write-offs - - - Net remeasurement of loss allowance (9.38) - - (9.38) ECL allowance balance as at 31 March 2020 136.20 - - 136.20

An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to Financial Investments measured at amortizedcost is as follows :

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Rs. in lakhs


Reconciliation of ECL balance (Continued)As at 31 March 2019

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 1,299.20 - - 1,299.20 Changes due to loans recognized in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognized during the period (330.19) - - (330.19) New Investments originated during the year 88.31 - - 88.31 Write-offs - - - Net premeasurement of loss allowance (774.80) - - (774.80) ECL allowance balance as at 31 March 2019 282.52 - - 282.52

Significant changes in the gross carrying value that contributed to change in loss allowance

Concentration of Credit Risk

Rs. in lakhsParticulars 31 March 2020 31 March 2019Concentration by Geographical region in India:North 1,985,141.76 1,797,636.32 East 1,735,414.17 1,554,329.99 West 1,748,629.89 1,712,872.13 South 1,338,434.07 1,246,427.44 Total Carrying Value 6,807,619.89 6,311,265.88

Maximum Exposure to credit Risk

Narrative Description of CollateralCollateral primarily include vehicles purchased by retail loan customers and machinery & property in case of SME customers. The financial investmentsare secured by way of a first ranking pari-passu and charge created by way of hypothecation on the receivables of the other company.

The maximum exposure to credit risk of loans and investment securities is their carrying amount. The maximum exposure is before considering both theeffect of mitigation through collateral.

Company’s loan portfolio is predominantly to finance retail automobile loans. The Company manages concentration of risk primarily by geographicalregion in India. The following tables show the geographical concentrations of trade advances and loans:

The company mostly provide loans to retail individual customers in Rural and Semi urban area which is of small ticket size. Change in any singlecustomer repayment will not impact significantly to Company's provisioning. All customers are being monitored based on past due and correctiveactions are taken accordingly to limit the Company's risk.

The contractual amount outstanding on financial investments that has been written off by the Company during the year ended 31 March 2020 and thatwere still subject to enforcement activity was nil (31 March 2019 : nil).The decrease in ECL of the portfolio was on account of decrease in the size of the portfolio.

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5050.2

Quantitative Information of Collateral

Gross value of total secured loans to value of collateral:Rs. in lakhs

Loan To Value31 March 2020 31 March 2019 31 March 2020 31 March 2019

Upto 50% 577,139.99 527,367.84 72,323.47 64,170.17 51 - 70% 1,042,245.97 1,013,327.24 14,520.50 13,990.99 71 - 100% 3,850,486.32 3,670,238.10 7,278.30 4,988.59 Above 100% 946,203.12 653,338.83 23,011.94 33,898.27

6,416,075.40 5,864,272.01 117,134.21 117,048.03

Gross value of credit impaired loans to value of collateral:Rs. in lakhs

Loan To Value31 March 2020 31 March 2019 31 March 2020 31 March 2019

Upto 50% 12,405.55 7,514.19 9,528.06 7,820.98 51 - 70% 14,099.09 11,186.35 1,046.17 1,009.71 71 - 100% 40,597.81 37,337.72 771.73 1,889.09 Above 100% 481,347.20 327,860.20 7,952.05 6,935.63

548,449.65 383,898.47 19,298.01 17,655.41

Fair value of collateral held against Credit Impaired assetsRs. in lakhs

31 March 2020 Maximum exposure to Credit Risk

Vehicles Plant and Machinery

Land and Building

Book Debts, Inventory and

other Working Capital items

Surplus Collateral

Total Collateral Net Exposure Associated ECL

Retail Loans 548,449.65 380,919.96 - - - (54,736.61) 326,183.35 222,266.30 155,276.38 SME Loans 19,298.01 3,762.00 10,206.56 24,663.58 1,202.50 (27,081.55) 12,753.09 6,544.92 15,823.87

31 March 2019 Maximum exposure to Credit Risk


Land and Building

Book Debts, Inventory and other Working Capital items

Surplus Collateral

Total Collateral

Net Exposure Associated ECL

Retail Loans 383,898.47 269,751.57 - - - (33,156.49) 236,595.08 147,303.39 64,550.72 SME Loans 17,655.41 2,110.00 9,393.69 17,066.17 - (17,643.57) 10,926.29 6,729.12 6,878.76

50.3

Rs in LakhsAmount

i) Respective amounts in SMA/overdue categories, where the moratorium/deferment was extended 762,429.12 ii) Respective amount where asset classification benefits is extended 83,589.48 iii) Provisions made during the Q4 - FY2020 # -

iv) Provisions adjusted during the respective accounting periods against slippages and the residual provisions N/A

Gross Value of Retail loans in stage 3

Gross Value of SME loans in stage 3


Rs. in lakhsFinancial Risk Management Framework (Continued)

The Company monitors its exposure to loan portfolio using the Loan To Value (LTV) ratio, which is calculated as the ratio of the gross amount of theloan to the value of the collateral. The value of the collateral for Retail loans is derived by writing down the asset cost at origination by 20% p.a onreducing balance basis. And the value of the collateral of Stage 3 Retail loans is based on the Indian Blue Book value for the particular asset. The value ofcollateral of SME loans is based on fair market value of the collaterals held.

Gross Value of Secured Retail loans

Gross Value of Secured SME loans

Credit Risk Management (Continued)

# Since the effective impairment allowance rate (as per ECL model) applied on standard assets outstanding equivalent Stage-1 and Stage-2 assets underInd AS financial statements is much higher than the prescribed general provision of 5% for the current quarter (out of 10% provision to be spread equallyover two quarters), the Company has not made any additional provision under this head in Ind AS financial statements for the quarter and year ended 31March 2020. However, the Company has made an additional general provision of Rs.4,169.62 lakhs at 5% of the total outstanding for the quarter andyear ended 31 March 2020 as per IRAC norms and the same is included in relevant disclosures as applicable to the Company.

Disclosure as required under RBI notification no. RBI/2019-20/220 DOR.No.BP.BC.63/21.04.048/2019-20 dated 17 April 2020 on COVID-19Regulatory Package - Asset Classification and Provisioning:

In respect of accounts in default but standard where moratorium upto 3 months is granted, and asset classification benefit is extended, theCompany has made general provisions of not less than 5 per cent of the total outstanding of such accounts as applicable for the quarterended 31 March 2020 within the overall provision requirement of 10% of the total outstanding to be spread equally over two quarters.Balance general provision of not less than 5% of the total outstanding of such accounts is to be made for the quarter ending 30 June 2020.

The below tables provide an analysis of the current fair values of collateral held for stage 3 assets. The value of collateral has not been considered whilerecognizing the loss allowances.

Particulars

186


5050.4 Liquidity Risk Management

a) Maturity profile of non-derivative financial liabilities

Rs. in lakhsParticulars Less than 1 Year 1-3 Years 3 Years to 5 Years 5 years and aboveNon-derivative financial liabilities31 March 2020Trade Payable : 63,574.79 - - - Debt Securities :- Principal 623,700.00 409,720.83 285,856.11 461,165.30 - Interest 142,834.57 252,315.83 126,640.04 152,459.23 Borrowings (Other than Debt Securities) :- Principal 1,065,615.90 1,683,880.19 201,275.05 - - Interest 174,428.68 151,283.89 13,471.24 - Deposit :- Principal 166,223.58 610,885.66 108,286.07 - - Interest 53,243.82 112,845.11 39,617.29 - Subordinated liabilities :- Principal 27,220.00 22,515.78 41,445.96 253,608.62 - Interest 30,643.76 54,809.33 55,705.96 94,421.68 Other financial liabilities : 157,359.26 61,101.83 7,808.97 5,125.97 Total 2,504,844.35 3,359,358.45 880,106.69 966,780.80 31 March 2019Trade Payable : 101,365.00 - - - Debt Securities :- Principal 990,938.45 768,136.12 192,096.94 286,415.30 - Interest 139,737.70 151,381.08 80,187.55 75,044.51 Borrowings (Other than Debt Securities) :- Principal 796,693.23 1,171,392.07 164,770.45 - - Interest 149,581.56 138,536.45 7,594.16 - Deposit :- Principal 137,787.00 367,398.25 64,702.42 - - Interest 34,180.33 78,489.98 18,944.05 - Subordinated liabilities :- Principal 14,500.00 42,735.78 21,013.72 281,040.86 - Interest 29,181.27 58,861.91 52,095.23 122,841.52 Other financial liabilities : 162,144.54 28,054.83 1,607.48 749.98 Total 2,556,109.09 2,804,986.48 603,012.00 766,092.17

Rs. in lakhs



Ultimate responsibility for liquidity risk management rests with the board of directors, which has established Asset and Liability Management Committee(ALCO) for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company managesliquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cashflows, and by matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. Theamount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which theCompany can be required to pay. The tables include both interest and principal cash flows.To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. Thecontractual maturity is based on the earliest date on which the Company may be required to pay.

187


50Rs. in lakhs


Financial Risk Management Framework (Continued)50.4 Liquidity Risk Management (Continued)

b) Maturity profile of derivative financial liabilities

Rs. in lakhsParticulars Less than 1 Year 1-3 Years 3 Years to 5 Years 5 years and aboveDerivative financial instruments31 March 2020Gross settled:Foreign exchange forward contracts- Payable 18.21 2,791.47 - - - Receivable 61.79 2,595.34 - - Interest Rate swaps- Payable - 1,468.82 - - - Receivable - - - - Currency swaps- Payable - - - - - Receivable 692.75 6,276.99 - - Total 772.75 13,132.62 - - 31 March 2019Gross settled:Foreign exchange forward contracts- Payable 13.62 2564.11 - - - Receivable 963.09 - - - Interest Rate swaps- Payable - 32.52 - - - Receivable - 90.93 - - Currency swaps- Payable - 5090.76 - - - Receivable - - - - Total 976.71 7778.32 - -

The following table details the Company’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on theundiscounted gross inflows and outflows on those derivatives that require gross settlement. There is no derivative instruments that is settled on a net basis.When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated bythe yield curves at the end of the reporting period.

188


5050.5 a) Financial Instruments regularly measured using Fair Value - recurring items

Rs. in lakhsFinancial assets/ financial liabilities

Fair value hierarchy

Valuation technique(s)

Key inputs

Financial assets / financial liabilities

Category As at 31 March 2020 As at 31 March 2019

1) Foreign currency forwards, Interest rate swaps & commodity derivatives

Financial Assets / (Liabilities)

Financial Instruments measured at FVTPL

(1,693.03) (1,258.33) Level 2 Discounted Cash Flow

Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counter parties.

2) Currency options Financial Assets / (Liabilities)


6,969.74 (5,437.81) Level 2 Black Scholes valuation model

Strike rate, spot rate, time to maturity, volatility and risk free interest rate

3) Investment in Mutual Funds

Financial Assets Financial instrument measured at FVTPL

324,125.20 62,349.01 Level 1 Quoted market price

4) Investment in equity instruments-Unquoted

Financial Assets Financial instrument designated at FVOCI

2,891.83 1,154.65 Level 3

5) Investment in convertible debentures

Financial Assets Financial instrument measured at FVOCI

- 1,088.52 Level 3

6) Investment in Bonds and Govt securities.


24,776.37 - Level 1 Quoted market price

The company doesn’t carry any financial asset or liability which it fair values on a non recurring basis.

Terminal growth rate, Weighted average cost of capital.

Increase or decrease in multiple will result in increase or decrease in valuation.

Fair Value Significant unobservable input(s) for level 3

hierarchyRelationship of

unobservable inputs to fair value and

sensitivity


Rs. in lakhs


Discounted Cash Flow

The discounted cash flow method used the future free cash flows of the company discounted by firm's WACC plus a risk factor measured by beta, to arrive at the present value. The key inputs includes projection of financial statements (key value driving factors), the cost of capital to discount the projected cash flows.

189


5050.5 b) Reconciliation of Level 3 fair value measurements of financial instruments measured at fair value

Rs. in lakhsParticulars Unquoted Equity

investment Convertible debentures

Bonds Govt Securities Total

31 March 2020 Opening balance 1,154.65 1,088.52 - - 2,243.17 Total gains or losses recognized: In Profit or loss a) in profit or loss - - - - - b) in other comprehensive income 278.20 - 332.94 424.60 1,035.74 Fair value of - Purchases made during the year 1,458.98 - 10,141.82 13,877.01 25,477.81 Disposals made during the year (1,088.52) - - (1,088.52) Transfers into Level 3 - - - - - Transfers out of Level 3 - - - - - Closing balance 2,891.83 - 10,474.76 14,301.61 27,668.20 31 March 2019 Opening balance 700.00 - - - 700.00 Total gains or losses recognized: In Profit or loss a) in profit or loss - - - - - b) in other comprehensive income 454.65 788.52 - - 1,243.17 Fair value of - Purchases made during the year 300.00 300.00 Transfers into Level 3 - - - - - Transfers out of Level 3 - - - - - Closing balance 1,154.65 1,088.52 - - 2,243.17

Rs in lakhs31 March 2020 31 March 2019

Fair Value of Investments 2891.83 1154.65Dividend income on investments held - -

Fair Value of Investments 1,218.53 - Dividend income on investments held - -


Rs. in lakhs

The Company has made the below equity investments neither for the purpose of trading nor for the purpose of acquiring. And accordingly, the investmenthas been classified in other comprehensive income as per Ind AS 109.5.7.5.


c) Equity Investments designated at Fair value through Other Comprehensive Income

There are no disposal of investment during the year ended 31 March 2020 and 2019 respectively.

Equity investment in Smartshift Logistic Solutions Private Limited (formerly Known as Orizonte Business Solutions Limited)

Equity investment in AAPCA Demystifying Data Technologies Private Limited

190


50


Rs. in lakhs

Financial Risk Management Framework (Continued)50.5 d) Financial Instruments measured at amortized cost

Rs in lakhs

Level 1 Level 2 Level 3As at 31 March 2020Financial assetsa) Cash and cash equivalent 67,679.04 67,679.04 67,679.04 b) Bank balances other than cash and cash equivalent 74,899.44 74,899.44 74,899.44 c) Trade Receivables 858.71 858.71 858.71 d) Loans and advances to customers 6,499,347.04 6,488,459.65 6,488,459.65 e) Financial investments - at amortized cost 112,822.76 120,367.53 105,594.07 14,773.46 f) Other financial assets 47,665.27 48,773.85 48,773.85 Total 6,803,272.26 6,801,038.22 248,172.55 64,406.02 6,488,459.65 Financial liabilitiesa) Trade Payables 63,574.79 63,574.79 63,574.79 b) Debt securities 1,774,487.73 1,892,262.55 1,892,262.55 c) Borrowings other than debt securities 2,948,734.27 2,884,790.94 2,884,790.94 d) Deposits 881,213.98 909,544.36 909,544.36 e) Subordinated Liabilities 341,794.57 382,366.57 382,366.57 f) Other financial liability 231,396.03 231,621.93 231,621.93 Total 6,241,201.37 6,364,161.14 2,274,629.12 4,089,532.02 - As at 31 March 2019Financial assetsa) Cash and cash equivalent 50,167.74 50,167.74 50,167.74 b) Bank balances other than cash and cash equivalent 45,681.43 45,681.43 45,681.43 c) Trade Receivables 519.19 519.19 519.19 d) Loans and advances to customers 6,124,962.80 6,094,529.46 6,094,529.46 e) Financial investments - at amortized cost 120,194.53 123,733.97 74,461.59 49,272.38 f) Other financial assets 16,895.13 16,895.13 16,895.13 Total 6,358,420.82 6,331,526.92 170,310.76 66,686.70 6,094,529.46 Financial liabilitiesa) Trade Payables 101,365.00 101,365.00 101,365.00 b) Debt securities 2,231,937.92 2,242,711.51 1,985,466.88 257,244.63 c) Borrowings other than debt securities 2,130,153.03 2,108,644.43 2,108,644.43 d) Deposits 566,718.41 582,144.94 582,144.94 e) Subordinated Liabilities 355,883.82 381,699.51 281,699.51 f) Other financial liability 192,662.95 192,662.95 192,662.95 Total 5,578,721.13 5,609,228.34 2,267,166.39 3,242,061.95 -

Valuation methodologies of financial instruments not measured at fair valueThere were no transfers between Level 1 and Level 2 during the year.

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured atfair value in the company's financial statements. These fair values were calculated for disclosure purposes only.

Particulars Carrying Value Fair value Fair value

191


50


Rs. in lakhs

Financial Risk Management Framework (Continued)50.5 d) Financial Instruments measured at amortized cost (Continued)

Short-term financial assets and liabilities

Loans and advances to customers

Financial Investments

Issued debt

Deposits from publicThe fair value of deposits received from public is estimated by discounting the future cash flows considering the interest rate applicable on the reportingdate for that class of deposits segregated by their tenure and cumulative/ non-cumulative scheme.Except for the above, carrying value of other financial assets/liabilities represent reasonable estimate of fair value.

For financial assets and financial liabilities that have a short-term maturity (less than twelve months), the carrying amounts, which are net of impairment,are a reasonable approximation of their fair value. Such instruments include: cash and balances, trade receivables, balances other than cash and cashequivalents, trade payables and investment & borrowings in commercial papers. Such amounts have been classified as Level 2 on the basis that noadjustments have been made to the balances in the balance sheet.

The fair values of loans and receivables are calculated using a portfolio-based approach, grouping loans as far as possible into homogenous groups basedon similar characteristics. The fair value is then extrapolated to the portfolio using discounted cash flow models that incorporate interest rate estimatesconsidering all significant characteristics of the loans. This fair value is then reduced by impairment allowance which is already calculated incorporatingprobability of defaults and loss given defaults to arrive at fair value net of risk.

For Government Securities, the market value of the respective Government Stock as on date of reporting has been considered for fair value computations.And since market quotes are not available in the absence of any trades, the carrying amount of Secured redeemable non-convertible debentures isconsidered as the fair value.

The fair value of issued debt is estimated by a discounted cash flow model incorporating interest rate estimates from market-observable data such assecondary prices for its traded debt itself.

There were no transfers between Level 1 and Level 2 during the year.

192


51 Maturity analysis of assets and liabilities

Rs. in lakhs

Assets Within 12 months After 12 months Total Within 12 months

After 12 months Total

Cash and cash equivalents 67,679.04 - 67,679.04 50,167.74 - 50,167.74 Bank balance 74,899.44 - 74,899.44 45,681.43 - 45,681.43 Derivative financial instruments 707.37 8,585.39 9,292.76 1,006.39 - 1,006.39 Trade receivables 858.71 - 858.71 519.19 - 519.19 Loans 2,511,926.27 3,987,420.77 6,499,347.04 2,667,650.59 3,457,312.21 6,124,962.80 Investments 335,108.81 255,987.81 591,096.62 218,775.01 160,395.36 379,170.37 Other financial assets 9,065.93 38,599.34 47,665.27 6,878.75 10,016.38 16,895.13 Current tax assets (Net) - 23,995.98 23,995.98 - 30,210.00 30,210.00 Deferred tax Assets (Net) - 48,962.66 48,962.66 - 37,172.53 37,172.53 Property, plant and equipment - 33,794.74 33,794.74 - 13,250.02 13,250.02 Capital work-in-progress - - - - - - Intangible assets under development - - - - - - Other Intangible assets 2,555.33 2,555.33 - 3,056.15 3,056.15 Other non-financial assets 4,867.57 2,106.11 6,973.68 4,499.38 1,207.45 5,706.83 Total Assets 3,005,113.14 4,402,008.13 7,407,121.27 2,995,178.48 3,712,620.10 6,707,798.58 LiabilitiesFinancial LiabilitiesDerivative financial instruments 17.77 3,998.29 4,016.06 45.20 7,657.33 7,702.53 Trade Payables - - i) total outstanding dues of micro enterprises and small enterprises

- - ii) total outstanding dues of creditors other than micro enterprises and small enterprises

63,574.79 - 63,574.79 101,365.00 - 101,365.00 Debt Securities 621,063.59 1,153,424.14 1,774,487.73 988,467.80 1,243,470.12 2,231,937.92 Borrowings (Other than Debt Securities) 1,065,745.58 1,882,988.69 2,948,734.27 796,574.47 1,333,578.56 2,130,153.03 Deposits 165,438.58 715,775.40 881,213.98 137,020.74 429,697.67 566,718.41 Subordinated Liabilities 27,146.48 314,648.09 341,794.57 14,362.52 341,521.30 355,883.82 Other financial liabilities 157,359.26 74,036.77 231,396.03 162,299.91 30,363.03 192,662.94 Non-Financial Liabilities - Current tax liabilities (Net) 1,392.09 - 1,392.09 1,392.09 - 1,392.09 Provisions 5,735.20 8,587.63 14,322.83 12,722.49 7,930.21 20,652.70 Other non-financial liabilities 8,558.22 1,245.21 9,803.43 6,974.15 1,553.69 8,527.84 Total Liabilities 2,116,031.56 4,154,704.22 6,270,735.78 2,221,224.37 3,395,771.91 5,616,996.28 Net 889,081.58 247,303.91 1,136,385.49 773,954.11 316,848.19 1,090,802.30

Other undrawn commitments 23,945.91 - 23,945.91 34,199.41 - 34,199.41 Total commitments 23,945.91 - 23,945.91 34,199.41 - 34,199.41

31 March 2020 31 March 2019

The table below shows the maturity analysis of assets and liabilities according to when they are expected to be recovered or settled.


Rs. in lakhs

193


52i)

a) Holding Company Mahindra & Mahindra Limited

b) Subsidiary Companies: Mahindra Insurance Brokers LimitedMahindra Rural Housing Finance LimitedMahindra Asset Management Co.Pvt. Ltd.Mahindra Trustee Co. Pvt. Ltd.Mahindra & Mahindra Financial Services Ltd Employees' Stock Option TrustMRHFL Employees Welfare TrustMahindra Finance CSR Foundation

c) Fellow Subsidiaries:Mahindra USA, IncNBS International LimitedMahindra First Choice Wheels LimitedMahindra Defence Systems Ltd.Mahindra Retail Private LimitedMahindra Integrated Business Solutions Ltd.Mahindra Vehicle Manufacturers LimitedMahindra Construction Co. Ltd.Bristlecone India LimitedMahindra Water Utilities LimitedMahindra Engineering & Chemical Products LtdMahindra Holidays & Resorts India LimitedGromax Agri Equipment LimitedMahindra First Choice Services LimitedMahindra Agri Solutions LimitedMahindra Intertrade LimitedNew Democratic Electoral Trust

d) Joint Ventures / Associates: Mahindra Finance USA, LLCIdeal Finance Limited (w.e.f. February 28, 2020)

e) Joint Ventures / Associates of Holding Company: Tech Mahindra LimitedSwaraj Engines LtdSmartshift Logistics Solutions Pvt. Ltd. (Formerly known as Resfeber Labs Private Limited)Mahindra Summit Agriscience LtdPSL Media & Communications Ltd

f) Key Management Personnel:(where there are transactions) Mr. V Ravi (Executive Director & Chief Financial Officer)

Mr. Dhananjay Mungale (Chairman & Independent Director)Mr. C. B. Bhave (Independent Director)Ms. Rama Bijapurkar (Independent Director)Mr. Milind Sarwate (Independent Director)Mr. Arvind Sonde (Independent Director)Mr. V. S. Parthasarthy (Director)

g) Relatives of Key Management Personnel Ms. Janaki Iyer(where there are transactions) Ms. Ramlaxmi Iyer

Mr. Risheek IyerMs. Girija SubramaniumMs. Prema MahadevanMs. Sudha BhaveMr. V MuraliMs. Srilatha RaviMr. Siddharth RaviMs. Asha Ramaswamy

Mr. Ramesh Iyer (Vice-Chairman & Managing Director)

(entities on whom control is exercised)

(entities with whom the Company has transactions)


Rs. in lakhs

Related party disclosures:As per Ind AS 24 on 'Related party disclosures', the related parties of the Company are as follows:

(entities on whom control is exercised)


194


52ii) The nature and volume of transactions of the Company during the year with above related parties were as follows:













Loan income- Smartshift Logistics Solutions Pvt Ltd. - - - - 306.59 - - - - - - - Subvention income- Mahindra & Mahindra Limited 2,310.08 3,183.79 - - - - - - - - - - Lease rental income- Mahindra & Mahindra Limited 607.29 - - - - - - - - - - - Interest income- Mahindra Rural Housing Finance Limited - - - 37.97 - - - - - - - - - NBS International Limited - - - - - 0.66 - - - - - - - Mahindra First Choice Services Limited - - - - - 9.68 - - - - - - - Mahindra Asset Management Co. Ltd. - - - 7.10 - - - - - - - - Income from sharing services- Mahindra Rural Housing Finance Limited - - 863.83 744.98 - - - - - - - - - Mahindra Insurance Brokers Limited - - 247.42 272.88 - - - - - - - - - Mahindra Asset Management Co. Ltd. - - 21.29 48.04 - - - - - - - - - Mahindra Trustee Company Pvt Ltd. - - 1.12 - - - - - - - - - Dividend Income- Mahindra Rural Housing Finance Limited - - 2,419.05 1,636.09 - - - - - - - - - Mahindra Insurance Brokers Limited - - 618.56 371.13 - - - - - - - - Interest expense- Mahindra & Mahindra Limited 1,903.06 3,524.01 - - - - - - - - - - - Mahindra Insurance Brokers Limited - - 319.48 552.53 - - - - - - - - - Tech Mahindra Limited - - - - 1,193.42 2,112.45 - - - - - - - Swaraj Engines Limited - - - - 65.97 45.62 - - - - - - - Mahindra Vehicle Manufacturers Limited - - - - 118.90 731.87 - - - - - - - Mahindra Intertrade Limited - - - - 58.41 35.12 - - - - - - - Mahindra Water Utilities Limited - - - - 57.86 2.20 - - - - - - - Mahindra Engineering & Chemical Products Ltd - - - - 1.16 - - - - - - - - PSL Media & Communications Ltd - - - - 6.63 - - - - - - - - Mahindra Holidays & Resorts India Limited - - - - 13.36 - - - - - - - - Mr. Ramesh Iyer - - - - - - - - 7.16 4.28 - - - Mr. V Ravi - - - - - - - - 6.36 0.07 - - - Mr. C. B. Bhave - - - - - - - - 6.33 3.97 - - - Others - - - - - - - - - - 32.84 19.71


Rs. in lakhs

Related party disclosures: (Continued)

Particulars Holding Company Subsidiary Companies Fellow Subsidiaries / Associate of Holding Company

Joint venture/Associate Key Management Personnel Relatives of Key Management Personnel

Notes forming part of the Financial Statements (Continued)

195


52


Rs. in lakhs



ii) The nature and volume of transactions of the Company during the year with above related parties were as follows: (Continued)













Other expenses- Mahindra & Mahindra Limited 2,336.78 2,865.67 - - - - - - - - - - - Mahindra Insurance Brokers Limited - - 6,843.80 6,971.18 - - - - - - - - - Mahindra Rural Housing Finance Limited - - 8.25 19.96 - - - - - - - - - Mahindra First Choice Wheels Limited - - - - 1,524.77 1,402.17 - - - - - - - Bristlecone India Limited - - - - 103.66 91.68 - - - - - - - Mahindra Vehicle Manufacturers Limited - - - - 70.49 124.38 - - - - - - - Mahindra Integrated Business Solutions Limited - - - - 1,591.19 943.39 - - - - - - - Mahindra Retail Pvt Limited - - - - 678.48 642.91 - - - - - - - Mahindra Finance CSR Foundation - - 11.50 - - - - - - - - - - Others - - - - 91.32 110.71 - - - - - - Donations- National Democratic Electoral Trust - - - - 600.00 240.00 - - - - - - Remuneration- Mr. Ramesh Iyer - - - - - - - - 655.94 715.72 - - - Mr. V Ravi - - - - - - - - 337.50 281.77 - - Reimbursement from parties- Mahindra & Mahindra Limited 170.15 2,664.63 - - - - - - - - - - - Gromax Agri Equipment Limited - - - - 58.86 9.24 - - - - - - - Mahindra Rural Housing Finance Limited - - 8.26 - - - - - - - - - - Mahindra Insurance Brokers Limited - - 6.09 - - - - - - - - - Reimbursement to parties- Mahindra Insurance Brokers Limited - - 23.54 - - - - - - - - - - Mahindra Rural Housing Finance Limited - - 18.97 - - - - - - - - - - Mahindra USA, Inc - - - - 259.41 188.00 - - - - - - Purchase of fixed assets- Mahindra & Mahindra Limited 191.31 275.91 - - - - - - - - - - - Mahindra Insurance Brokers Limited - - - 10.27 - - - - - - - - - Mahindra First Choice Wheels Limited - - - - - 11.97 - - - - - - - Mahindra First Choice Services Limited - - - - 176.09 118.00 - - - - - -

Key Management Personnel Relatives of Key Management Personnel


Joint venture/Associate

196


52


Rs. in lakhs
















Sale of fixed assets- Mahindra Rural Housing Finance Limited - - 9.18 2.51 - - - - - - - - - Mahindra First Choice Wheels Limited - - - - - 8.94 - - - - - - - Mahindra First Choice Services Limited - - - - - 300.34 - - - - - - Investments made- Mahindra Rural Housing Finance Limited - - - 15,000.00 - - - - - - - - - Mahindra Asset Management Co. Ltd. - - 5,000.00 4,000.00 - - - - - - - - - Mahindra Finance USA, LLC - - - - - - - 963.21 - - - - - Ideal Finance Ltd - - - - - - 4,399.60 - - - - - - Mahindra Finance CSR Foundation - - 0.10 - - - - - - - - - - Smartshift Logistics Solutions Pvt Ltd. - - - - 250.00 - - - - - - - Fixed deposits taken- Mahindra Insurance Brokers Limited - - 1,000.00 2,075.00 - - - - - - - - - Mahindra Engineering & Chemical Products Ltd - - - - 124.00 - - - - - - - - PSL Media & Communications Ltd - - - - 100.00 - - - - - - - - Mahindra Holidays & Resorts India Limited - - - - 1,590.00 - - - - - - - - Mr. Ramesh Iyer - - - - - - - - 172.10 40.39 - - - Mr. V Ravi - - - - - - - - 100.00 8.13 - - - Mr. C. B. Bhave - - - - - - - - 30.00 30.00 - - - Others - - - - - - - - - - 420.23 247.97 Fixed deposits matured- Mahindra Insurance Brokers Limited - - 1,550.00 5,725.00 - - - - - - - - - PSL Media & Communications Ltd - - - - 80.00 - - - - - - - - Mr. Ramesh Iyer - - - - - - - - 65.72 61.48 - - - Others - - - - - - - - - - 212.33 200.23 Dividend paid- Mahindra & Mahindra Limited 20,553.50 12,648.31 - - - - - - - - - - - Mahindra & Mahindra Financial Services Ltd Employees' Stock Option Trust

- - 186.00 129.64 - - - - - - - - - Mr. Ramesh Iyer - - - - - - - - 51.52 31.12 - - - Mr. V Ravi - - - - - - - - 34.53 21.25 - - - Ms. Rama Bijapurkar - - - - - - - - 1.95 1.20 - - - Mr. Dhananjay Mungale - - - - - - - - 3.25 2.00 - - - Mr. V. S. Parthasarthy - - - - - - - - 0.02 0.01 - - - Others - - - - - - - - - - 0.07 0.03


Joint venture/Associate Relatives of Key Management Personnel

Key Management Personnel

197


52


Rs. in lakhs
















Inter corporate deposits taken- Mahindra & Mahindra Limited 10,000.00 70,000.00 - - - - - - - - - - - Mahindra Insurance Brokers Limited - - 5,575.00 10,175.00 - - - - - - - - - Tech Mahindra Limited - - - - - 40,000.00 - - - - - - - Mahindra Vehicle Manufacturers Limited - - - - - 30,000.00 - - - - - - - Swaraj Engines Limited - - - - 1,000.00 1,000.00 - - - - - - - Mahindra Water Utilities Limited - - - - 1,575.00 350.00 - - - - - - - Mahindra Intertrade Limited - - - - - 1,100.00 - - - - - - Inter corporate deposits repaid / matured- Mahindra & Mahindra Limited 40,000.00 70,000.00 - - - - - - - - - - - Mahindra Insurance Brokers Limited - - 3,750.00 11,900.00 - - - - - - - - - Tech Mahindra Limited - - - - 40,000.00 10,000.00 - - - - - - - Mahindra Vehicle Manufacturers Limited - - - - 10,000.00 20,000.00 - - - - - - - Swaraj Engines Limited 1,000.00 - Mahindra Water Utilities Limited - - - - 1,050.00 - - - - - - - - Mahindra Intertrade Limited - - - - 1,000.00 100.00 - - - - - - Debentures issued- Mahindra & Mahindra Limited 19,500.00 - - - - - - - - - - - Subordinated debt repaid- Mahindra Rural Housing Finance Limited - - - 700.00 - - - - - - - - Inter corporate deposits given- Mahindra First Choice Services Limited - - - - - 700.00 - - - - - - - Mahindra Asset Management Co. Ltd. - - - 1,000.00 - - - - - - - - Inter corporate deposits refunded- Mahindra First Choice Services Limited - - - - - 700.00 - - - - - - - Mahindra Asset Management Co. Ltd. - - - 1,000.00 - - - - - - - -


Joint venture/Associate Key Management Personnel Relatives of Key Management Personnel

198


52


Rs. in lakhs



iii) Balances as at the end of the year: (Continued)

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

Balances as at the end of the periodReceivables- Mahindra & Mahindra Limited 297.83 2,744.91 - - - - - - - - - - - Mahindra Rural Housing Finance Limited - - 140.59 82.64 - - - - - - - - - Mahindra Asset Management Co. Ltd. - - 3.08 3.08 - - - - - - - - - Mahindra Trustee Co. Pvt. Ltd. - - 1.00 - - - - - - - - - - NBS International Limited - - - - - 26.11 - - - - - - - Mahindra First Choice Services Limited - - - - - 135.09 - - - - - - Loan given (including interest accrued but not due)- Mahindra Construction Co. Ltd. - - - - 334.33 334.33 - - - - - - - Smartshift Logistics Solutions Pvt Ltd. - - - - 1,879.96 1,700.00 - - - - - - Inter corporate deposits given (including interest accrued but not due)- Mahindra Construction Co. Ltd. - - - - 113.38 113.38 - - - - - - Investments- Mahindra Rural Housing Finance Limited - - 79,929.79 51,252.22 - - - - - - - - - Mahindra Insurance Brokers Limited - - 45.16 45.16 - - - - - - - - - Mahindra Asset Management Co. Ltd. - - 21,000.00 16,000.00 - - - - - - - - - Mahindra Trustee Co. Pvt. Ltd. - - 50.00 50.00 - - - - - - - - - Mahindra Finance CSR Foundation - - 0.10 - - - - - - - - - - Mahindra Finance USA, LLC - - - - - - 21,054.81 21,054.81 - - - - - Ideal Finance Ltd - - - - - - 4,399.60 - - - - - - New Democratic Electoral Trust - - - - 1.00 1.00 - - - - - - - Smartshift Logistics Solutions Pvt Ltd. - - - - 950.00 700.00 - - - - - -

Particulars Holding Company Subsidiary Companies Fellow Subsidiaries / Associate of

Holding Company Joint venture/Associate Relatives of Key Management

PersonnelKey Management Personnel

199


52


Rs. in lakhs



iii) Balances as at the end of the year: (Continued)

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

As at 31 March 2020

As at 31 March 2019

Payables- Mahindra Insurance Brokers Limited - - 1,237.38 2,815.15 - - - - - - - - - Mahindra First Choice Wheels Limited - - - - 349.46 239.58 - - - - - - - Mahindra USA, Inc - - - - 161.38 58.60 - - - - - - - Mahindra Integrated Business Solutions Limited - - - - 129.08 53.94 - - - - - - - NBS International Limited 23.34 - - Mahindra Retail Pvt Ltd 93.36 39.24 - Others - - - - 16.96 56.89 - - - - - - Inter corporate deposits taken (including interest accrued but not due)- Mahindra & Mahindra Limited 10,212.46 41,718.79 - - - - - - - - - - - Mahindra Insurance Brokers Limited - - 2,152.13 316.23 - - - - - - - - - Tech Mahindra Limited - - - - - 41,642.19 - - - - - - - Mahindra Vehicle Manufacturers Limited - - - - - 10,066.88 - - - - - - - Swaraj Engines Limited - - - - 1,019.65 1,041.05 - - - - - - - Mahindra Water Utilities Limited - - - - 881.66 351.98 - - - - - - - Mahindra Intertrade Limited - - - - - 1,029.78 - - - - - - Debentures (including interest accrued but not due)- Mahindra & Mahindra Limited 20,109.37 - - - - - - - - - - - Fixed deposits (including interest accrued but not due)- Mahindra Insurance Brokers Limited - - 3,299.05 4,001.72 - - - - - - - - - Mahindra Engineering & Chemical Products Ltd - - - - 125.04 - - - - - - - - PSL Media & Communications Ltd - - - - 104.25 - - - - - - - - Mahindra Holidays & Resorts India Limited - - - - 1,602.03 - - - - - - - - Mr. Ramesh Iyer - - - - - - - - 175.82 41.83 - - - Mr. V Ravi - - - - - - - - 113.97 8.19 - - - Mr. C. B. Bhave - - - - - - - - 88.24 52.54 - - - Others - - - - - - - - - - 486.47 288.74 Key Management Personnel as defined in Ind AS 24

Key Management Personnel Relatives of Key Management Personnel

Particulars Holding Company Subsidiary Companies Fellow Subsidiaries / Associate of

Holding Company Joint venture/Associate

200

Mahindra & Mahindra Financial Services Limitedfor the year ended 31 March 2020

52iv)

Rs. in lakhsName of the KMP Nature of transactions 31 March 2020 31 March 2019 Mr. Ramesh Iyer (Vice-Chairman & Managing Director)

Gross Salary including perquisites 469.72 446.15 Commission 164.12 116.69 Stock Option 7.10 139.91 Others - Contribution to Funds 29.70 26.05

670.64 728.80 Mr. V. Ravi (Executive Director & Chief Financial Officer)

Gross Salary including perquisites 242.43 227.51 Commission 95.07 53.05 Stock Option - 1.21 Others - Contribution to Funds 9.00 10.63

346.50 292.40 Mr. Dhananjay Mungale (Chairman & Independent Director)

Commission 28.00 26.00 Other benefits 11.30 10.00

39.30 36.00 Ms. Rama Bijapurkar (Independent Director)


29.50 25.70 Mr. C.B. Bhave (Independent Director)


30.90 28.10 Mr. Milind Sarwate (Independent Director)(Appointed w.e.f. 1 April 2019) Commission - -

Other benefits 9.70 - 9.70 -

Mr. Arvind V. Sonde (Independent Director)(Appointed w.e.f. 9 December 2019) Commission - -

Other benefits 1.40 - 1.40 -

Related party disclosures: (Continued)Rs. in lakhs

Details of related party transactions with Key Management Personnel (KMP) are as under :Key management personnel are those individuals who have the authority and responsibility for planning and exercising power to directly or indirectlycontrol the activities of the Company or its employees. Accordingly, the Company considers any Director, including independent and non-executivedirectors, to be key management personnel for the purposes of IND AS 24 - Related Party Disclosures.


201

Mahindra & Mahindra Financial Services Limitedfor the year ended 31 March 2020

52v)

Rs. in lakhsParticulars Relation Balance as on

1 April 2019Advances /

investmentsRepayments/

saleBalance as on 31

March 2020(A) Loans and advancesMahindra Rural Housing Finance Ltd. Subsidiary - - - - Mahindra Retail Pvt Ltd Fellow subsidiary - - - - 2 x 2 Logistics Pvt Ltd Fellow subsidiary - - - -

Fellow Associate 1,700.00 800.00 637.18 1,862.82 1,700.00 800.00 637.18 1,862.82

(B) Unsecured redeemable non-convertible subordinate debenturesMahindra Rural Housing Finance Ltd. Subsidiary - - - -

- - - - (C) InvestmentsMahindra Insurance Brokers Ltd. Subsidiary 45.16 - - 45.16 Mahindra Rural Housing Finance Ltd. Subsidiary 51,252.22 28,677.57 - 79,929.79

Wholly owned Subsidiary 16,000.00 5,000.00 - 21,000.00 Mahindra Trustee Company Pvt. Ltd. Wholly owned Subsidiary 50.00 - - 50.00 Mahindra Finance CSR Foundation Wholly owned Subsidiary - 0.10 - 0.10 Mahindra Finance USA, LLC Joint Venture 21,054.81 - - 21,054.81 Ideal Finance Limited, Sri Lanka Joint Venture - 4,399.60 - 4,399.60

Fellow Associate 700.00 250.00 - 950.00 New Democratic Electoral Trust Fellow subsidiary 1.00 - - 1.00

89,103.19 38,327.27 - 127,430.46 Total 90,803.19 39,127.27 637.18 129,293.28


Particulars Relation Balance as on 1 April 2018

Advances / investments

Repayments/sale

Balance as on 31 March 2019

(A) Loans and advancesMahindra Rural Housing Finance Ltd. Subsidiary - - - - Mahindra Retail Pvt Ltd Fellow subsidiary - - - - 2 x 2 Logistics Pvt Ltd Fellow subsidiary - - - -

Fellow Associate - 1,700.00 - 1,700.00 - 1,700.00 - 1,700.00

(B) Unsecured redeemable non-convertible subordinate debenturesMahindra Rural Housing Finance Ltd. Subsidiary 700.00 - 700.00 -

700.00 - 700.00 - (C) InvestmentsMahindra Insurance Brokers Ltd. Subsidiary 45.16 - - 45.16 Mahindra Rural Housing Finance Ltd. Subsidiary 36,252.22 15,000.00 51,252.22

Wholly owned Subsidiary 12,000.00 4,000.00 16,000.00 Mahindra Trustee Company Pvt. Ltd. Wholly owned Subsidiary 50.00 - - 50.00 Mahindra Finance USA, LLC Joint Venture 20,091.60 963.21 - 21,054.81

Fellow Associate 700.00 - - 700.00 New Democratic Electoral Trust Fellow subsidiary 1.00 - - 1.00

69,139.98 19,963.21 - 89,103.19 Total 69,839.98 21,663.21 700.00 90,803.19

Smartshift Logistics Solutions Pvt. Ltd. (refer note no. (iii))



Mahindra Asset Management Company Pvt. Ltd.

Mahindra Asset Management Company Pvt. Ltd.

Rs. in lakhs

Related party disclosures: (Continued)Disclosure required under Section 186 (4) of the Companies Act, 2013As at 31 March 2020



202

Mahindra & Mahindra Financial Services Limitedfor the year ended 31 March 2020Notes forming part of the Financial Statements (Continued)

Rs. in lakhs

52v)

Notes :i) Above loans & advances and investments have been given for general business purposes and figures are at historical cost.ii) There were no guarantees given / securities provided during the yeariii) Formerly known as Resfeber Labs Private Limited (RLPL) post merger of Orizonte Business Solutions Limited with the former.Orizonte Business Solutions Limited was acquired by or merged with Resfeber Labs Private Limited (RLPL) in June 2019 and then the name of RLPL waschanged to Smartshift Logistics Solutions Private Limited w.e.f. 22 July 2019. The closing balance at the end of the respective years includes additionalinvestment made and fair value gain recognized as per Ind AS 109 - Financial Instruments.

Related party disclosures: (Continued)Disclosure required under Section 186 (4) of the Companies Act, 2013 (Continued)

203


53

Rs. in lakhs

Sr.No.

Amount Outstanding

Amount Overdue

Amount Outstanding

Amount Overdue

1)(a) Debentures :

- Secured 1,845,457.15 - 2,065,266.41 - - Unsecured 43,030.23 - 21,515.42 -

(b) Deferred Credits - - - - (c) Term Loans 1,736,234.10 - 1,380,336.19 - (d) Inter-corporate loans and Other Borrowings 14,265.90 - 96,166.87 - (e) Commercial Paper 0.00 - 257,244.63 - (f) Public Deposits 880,799.31 - 568,523.11 - (g) Fixed Deposits accepted from Corporates 42,653.61 - 27,295.47 - (h) FCNR Loans 18,302.03 - 63,424.85 - (i) External Commercial Borrowings 275,690.59 - 138,084.98 - (j) Associated liabilities in respect of securitization transactions 889,320.81 - 435,362.66 - (k) Subordinate debt (including NCDs issued through Public issue) 366,749.00 - 378,369.51 - (l) Other Short Term Loans and credit facilities from banks 26,400.74 - 28,454.72 -

2)

(a) In the form of Unsecured debentures - - - - - - - -

(c) Other public deposits 880,799.31 - 568,523.11 - As at

31 March 2020As at

31 March 2019Amount

OutstandingAmount

OutstandingAsset side:

3) Break-up of Loans and Advances including bills receivables [other than those included in (4) below] :(a) Secured - - (b) Unsecured 265,447.86 320,688.21

4) Break up of Leased Assets and stock on hire and hypothecation loans counting towards AFC activities :(i) Lease assets including lease rentals under sundry debtors : (a) Financial lease - - (b) Operating lease 63.16 18.85 (ii) Stock on hire including hire charges under sundry debtors : (a) Assets on hire - - (b) Repossessed Assets - - (iii) Other loans counting towards AFC activities : (a) Loans where assets have been repossessed 45,870.06 26,319.22 (b) Loans other than (a) above 6,188,824.67 5,778,455.71

5) Break-up of Investments :Current Investments :1. Quoted : (i) Shares : (a) Equity - - (b) Preference - - (ii) Debentures and Bonds 2,477.16 3,662.07 (iii) Units of mutual funds 324,125.20 62,148.40 (iv) Government Securities 499.85 - 2. Unquoted : (i) Shares : (a) Equity - - (b) Preference - - (ii) Debentures and Bonds - - (iii) Units of mutual funds - - (iv) Government Securities - - (v) Certificate of Deposits with Banks - 46,910.08 (vi) Commercial Papers - 81,065.33 (vii) Investments in Pass Through Certificates under securitization transactions 8,006.59 20,509.33

Liabilities side:


Schedule to the Balance Sheet of a Non-Banking Financial Company as required under Master Direction - Non-BankingFinancial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank)Directions, 2016

Particulars

Rs. in lakhs


Loans and advances availed by the NBFC inclusive of interest accrued thereon but not paid :

Break-up of (1) (f) above (Outstanding public deposits inclusive of interest accrued thereon but notpaid) :

(b) In the form of partly secured debentures i.e. Debentures where there is a shortfall in the value of security

204



Rs. in lakhs

53

Rs. in lakhsParticulars As at

31 March 2020As at

31 March 2019Amount

OutstandingAmount

Outstanding5) Break-up of Investments : (Continued)

Long Term Investments :1. Quoted : (i) Shares : (a) Equity - - (b) Preference - - (ii) Debentures and Bonds (Bonds of FCI NCDs of NABARD) 10474.76 2474.37 (iii) Units of mutual funds 0.00 200.61 (iv) Government Securities 111851.06 70922.152. Unquoted : (i) Shares : (a) Equity 129372.29 89557.84 (b) Preference - - (ii) Debentures and Bonds - 1,088.52 (iii) Units of mutual funds - - (iv) Government Securities - - (v) Investments in Pass Through Certificates under securitization transactions 4,289.71 631.67

6) Borrower group-wise classification assets financed as in (3) and (4) above :

Category Secured Unsecured Total Secured Unsecured Total1. Related Parties (a) Subsidiaries - - - - - - (b) Companies in the same group - - - - - - (c) Other related parties - - - - - - 2. Other than related parties 6,234,694.73 265,511.02 6,500,205.75 5,804,774.93 320,707.06 6,125,481.99

Total 6,234,694.73 265,511.02 6,500,205.75 5,804,774.93 320,707.06 6,125,481.99

7) Investor group-wise classification of all investments ( current and long term ) in shares and securities ( both quoted and unquoted ) :

Category Market Value/ Break up or fair value or

NAV

Book Value(net of

provisions)Market Value/

Break up or fair value or

NAV

Book Value(net of

provisions)

1. Related Parties (a) Subsidiaries 101,025.05 101,025.05 67,347.38 67,347.38 (b) Companies in the same group 26,816.73 26,816.73 22,210.46 22,210.46 (c) Other related parties - - - - 2. Other than related parties 463,079.05 462,942.86 289,895.05 289,612.53 Total 590,920.83 590,784.64 379,452.89 379,170.37

8) Other information:As at

31 March 2020As at

31 March 2019Particulars Amount Amounti) Gross Non-Performing Assets : (a) Related parties 473.39 473.39 (b) Other than related parties 574,200.47 406,583.29 ii) Net Non-Performing Assets : (a) Related parties - - (b) Other than related parties 396,647.41 329,070.49 iii) Assets acquired in satisfaction of debt : - -

Amount net of provisions Amount net of provisions


Schedule to the Balance Sheet of a Non-Banking Financial Company as required under Master Direction - Non-BankingFinancial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank)Directions, 2016 (Continued)


205

Notes forming part of the Financial Statements (Continued)for year ended 31 March 2020

54

I) Capital

As at 31 March

2020 As at

31 March 2019

CRAR (%) 19.6% 20.3%CRAR-Tier I Capital (%) 15.4% 15.5%CRAR-Tier II Capital (%) 4.2% 4.8%Amount of subordinated debt raised as Tier-II capital (Rs. in Lakhs) - 33,687.23 Amount raised by issue of Perpetual Debt Instruments - -

II) InvestmentsRs. in lakhs

As at 31 March

2020 As at

31 March 2019

Value of Investments(i) Gross Value of Investments (a) In India 565,778.40 358,398.08 (b) Outside India 25,454.41 21,054.81 (ii) Provisions for Depreciation (a) In India 136.19 282.52 (b) Outside India - - (iii) Net Value of Investments (a) In India 565,642.21 358,115.56 (b) Outside India 25,454.41 21,054.81 Movement of provisions held towards depreciation on investments.(i) Opening balance 282.52 1,299.21 (ii) Add : Provisions made during the year - - (iii) Less : Write-off / write-back of excess provisions during the year (146.33) (1,016.69)(iv) Closing balance 136.19 282.52

III) Derivativesa)

As at 31 March

2020 As at

31 March 2019

(i) The notional principal of swap agreements 283,298.87 202,969.68 - -

(iii) Collateral required by the Company upon entering into swaps - - (iv) Concentration of credit risk arising from the swaps - - (v) The fair value of the swap book ( Asset / (Liability) ) 5,276.71 (6,696.14)

Exchange Traded Interest Rate (IR) DerivativeThe Company has not entered into any exchange traded derivative.

The CRAR as of 31 March 2019 as disclosed in the comparative period numbers below was computed based on the carrying values as reflected in thefinancial statements prepared in accordance with requirements of Ind AS. The Reserve Bank of India, vide its circular reference RBI/2019-20/170 DOR(NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13 March 2020 outlined the regulatory guidance in relation to Ind AS financial statements fromfinancial year 2019-20 onwards. This included guidance for computation of ‘owned funds’ , ‘net owned funds’ and ‘regulatory capital’. Accordingly, theCRAR as of 31 March 2020 has been computed in accordance with these requirements read with the requirements of the Master Direction DNBR. PD.008/03.10.119/2016-17 dated September 01, 2016 (as amended).

These disclosures are made pursuant to Reserve Bank of India Master Direction DNBR. PD. 008/03.10.119/2016-17 dated September 01, 2016 (asamended), to the extent applicable to the Company.


Rs. in lakhs

Balance Sheet Disclosures as required under Master Direction - Non-Banking Financial Company - SystemicallyImportant Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016

Forward Rate Agreement (FRA) / Interest Rate Swap (IRS)

(ii) Losses which would be incurred if counterparties failed to fulfil their obligations under the agreements

Particulars

Particulars

206



Rs. in lakhs

54

III) Derivatives (Continued)b)

c)

i)

ii)

AAiii)

d) Foreign currency non-repatriate loans availed:Rs. in lakhs

CurrencyDerivatives

InterestRate

Derivatives Currency

Derivatives Interest

RateDerivatives

i) Derivatives (Notional Principal Amount) - For hedgingii) Marked to Market Positions [1] (a) Asset (+) Estimated gain 9,292.77 - 917.97 88.42 (b) Liability (-) Estimated loss (2,559.18) (1,456.88) (7,670.52) (32.01) iii) Credit Exposure [2] - - - - iv) Unhedged Exposures - - - -

283,298.87 202,969.68

Quantitative Disclosures –


Exchange Traded Interest Rate (IR) Derivatives

Credit risk is controlled by restricting the counterparties that the Company deals with, to those who either have banking relationship with theCompany or are internationally renowned or can provide sufficient information. Market/Price risk arising from the fluctuations of interest rates andforeign exchange rates or from other factors shall be closely monitored and controlled. Normally transaction entered for hedging, will run till itslife, irrespective of profit or loss. However in case of exceptions it has to be un-winded only with prior approval of M.D/CFO/Treasurer Liquidityrisk is controlled by restricting counterparties to those who have adequate facility, sufficient information, and sizable trading capacity andcapability to enter into transactions in any markets around the world.The respective functions of trading, confirmation and settlement should be performed by different personnel. The front office and back-office roleis well defined and segregated. All the derivatives transactions is quarterly monitored and reviewed by CFO and Treasurer. All the derivativetransactions have to be reported to the board of directors on every quarterly board meetings including their financial positions.

The Company is not carrying out any activity of providing Derivative cover to third partiesDisclosures on Risk Exposure in Derivatives Qualitative Disclosures – The Company undertakes the derivatives transaction to prudently hedge the risk in context of a particular borrowing or to diversify sources ofborrowing and to maintain fixed and floating borrowing mix. The Company does not indulge into any derivative trading transactions. TheCompany reviews, the proposed transaction and outline any considerations associated with the transaction, including identification of the benefitsand potential risks (worst case scenarios); an independent analysis of potential savings from the proposed transaction. The Company evaluates allthe risks inherent in the transaction viz., counter party risk, Market Risk, Operational Risk, basis risk etc.

Balance Sheet Disclosures as required under Master Direction - Non-Banking Financial Company - SystemicallyImportant Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 (Continued)

207



Rs. in lakhs

54

IV) Disclosures relating to Securitizationa)

Applicable for transactions effected after the date of circular:Rs. in lakhs

Sr. no.

Particulars As at 31 March

2020 As at

31 March 2019

1) No of SPVs sponsored by the NBFC for securitization transactions 24 19 2) Total amount of securitized assets as per books of the SPVs sponsored 888,170.82 434,734.49 3) Total amount of exposures retained by the NBFC to

comply with MRR as on the date of balance sheeta) Off-balance sheet exposures First loss- Credit enhancement in form of corporate undertaking 111,533.49 51,128.05 Others - - b) On-balance sheet exposures First loss- Cash collateral term deposits with banks 48,533.64 24,538.60 Others- Retained interest in pass through certificates (excluding accrued interest) - 3.43

4) Amount of exposures to securitization transactionsother than MRR a) Off-balance sheet exposures (i) Exposure to own securitizations First loss - - Loss - - Excess Interest Spread 119,409.11 53,652.25 (ii) Exposure to third party securitizations First loss Others - - b) On-balance sheet exposures (i) Exposure to own securitizations First loss - - Others- - - Cash collateral term deposits with banks - - (ii) Exposure to third party securitizations First loss - - Others - -

b)

c)Rs. in lakhs


2020 As at

31 March 2019

i) No. of accounts - - ii) Aggregate value (net of provisions) of accounts sold - - iii) Aggregate consideration - - iv) Additional consideration realized in respect of accounts transferred in earlier years - - v) Aggregate gain / loss over net book value - -

Details of Assignment transactions undertaken by NBFCs

Details of Financial Assets sold to Securitization / Reconstruction Company for Asset ReconstructionDuring the current year and the previous year, the Company has not sold any financial assets to Securitization /Reconstruction Company for assetreconstruction.


Disclosures in the notes to the accounts in respect of securitization transactions as required under revised guidelines on securitization transactionsissued by RBI vide circular no.DNBS.PD.No.301/3.10.01/2012-13 dated August 21, 2012.

208



Rs. in lakhs

54

IV) Disclosures relating to Securitization (Continued)d)i)

ii)

V) Exposuresa) Exposure to Real Estate Sector

As at 31 March

2020 As at

31 March 2019

a) Direct exposurei)

- -

ii) 1,119.45 -

iii) - -

a. - - b.

- - 1,119.45 -

b) Exposure to Capital MarketRs. in lakhs

As at 31 March

2020 As at

31 March 2019

129,372.29 90,646.36 - -

- - - -

- - - -

- - - - 129,372.29 90,646.36

(vii) bridge loans to companies against expected equity flows / issues;

Particulars

(i) direct investment in equity shares, convertible bonds, convertible debentures and units of equity-oriented mutual funds the corpus of which is not exclusively invested in corporate debt;

(ii) advances against shares / bonds / debentures or other securities or on clean basis to individuals for investment in shares (including IPOs / ESOPs), convertible bonds, convertible debentures, and units of equity-oriented mutual funds;

(iii) advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are taken as primary security;

Details of non-performing financial assets purchased / soldDetails of non-performing financial assets purchased:During the current year and the previous year the Company has not purchased any non -performing financial assets.Details of Non-performing Financial Assets sold:During the current year and the previous year the Company has not sold any non -performing financial assets.


(iv) advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds i.e. where the primary security other than shares / convertible bonds / convertible debentures / units of equity oriented mutual funds 'does not fully cover the advances;

Rs. in lakhs

Commercial Real Estate -Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercialpremises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.).Exposure shall also include non-fund based limits.Investments in Mortgage Backed Securities (MBS) and other securitized exposures -

Total Exposure to Real Estate Sector

Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercialpremises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.).Exposure shall also include non-fund based limits.

ResidentialCommercial Real Estate

Particulars

Residential Mortgages - Lending fully secured by mortgages on residential property that is or will be occupied by theborrower or that is rented.

(viii) all exposures to Venture Capital Funds (both registered and unregistered)Total Exposure to Capital Market

(v) secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers;

(vi) loans sanctioned to corporates against the security of shares / bonds / debentures or other securities or on clean basis for meeting promoter's contribution to the equity of new companies in anticipation of raising resources;

209



Rs. in lakhs

54

V) Exposures (Continued)c) Details of financing of parent company products

d) Details of Single Borrower Limit (SGL) /Group Borrower Limit (GBL) exceeded by the NBFC

e) Unsecured Advances

VI) Miscellaneousa) Registration obtained from other financial sector regulators

b) Disclosure of Penalties imposed by RBI and other regulators

c) Related Party Transactions

d) Rating assigned by credit rating agencies and migration of ratings during the yearCredit Rating -

VII)

VIII)

IX)All the subsidiaries of the Company have been consolidated as per Accounting Standard 21. Refer consolidated financial statements (CFS)

Additional Disclosures :All the subsidiaries of the Company have been consolidated as per Accounting Standard 21. Refer consolidated financial statements (CFS)

Net Profit of Loss for the period ,prior period items and change in accounting policiesThere are no such material items which require disclosures in the notes to Accounts in terms of the relevant Accounting Standard.Revenue Recognition(Refer note no. 2.6 under Summary of Significant Accounting Policies)Accounting Standard 21- Consolidated Financial Statements (CFS)

During the year under review, India Ratings & Research Private Limited (IND), which is part of Fitch Group, reaffirmed the rating of Company’sLong-term instrument and Subordinated Debt programme to ‘IND AAA/Stable’and Principal protected market linked debenture: IND PP-MLDAAA emr/Stable. The Company’s Short Term Commercial Paper has been rated at IND A1+.During the year under review, Credit Analysis & Research Limited (CARE), also reaffirmed the ‘CARE AAA/ Stable’ rating to Company’s Long-term debt instrument and Subordinated Debt programme.During the year under review, Brickwork Ratings India Private Limited (BWR) has, reaffirmed the ‘BWR AAA/stable’ rating of the Company’sLong-term Subordinated Debt Issue.The ‘AAA’ ratings denote the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest creditrisk.

During the current year and the previous year, there are no penalties imposed by RBI and other regulators

(refer note 52)

During the year under review, CRISIL Limited (CRISIL), has reaffirmed the rating to the Company’s Long-term Debt Instruments and BankFacilities as ‘CRISIL AA+/ Stable’ and the Company’s Fixed Deposit Programme as ‘FAAA/Stable’, respectively. The ‘AA+/Stable’ ratingindicates a high degree of safety with regard to timely payment of financial obligations. The rating on the Company’s Short-term Bank Loans andCash Credit facility has been reaffirmed at ‘CRISIL A1+’ which is the highest level of rating.

Of the total financing activity undertaken by the Company during the financial year 2019-20, 40% (31 March 2019: 41%) of the financing wastowards parent company products.

During the current year and the previous year, the Company has not exceeded the prudential exposure limits.

As at 31 March 2020, the amount of unsecured advances stood at Rs. 2,74,410.28 Lakhs (31 March 2019: Rs.3,29,945.84 Lakhs).

During the current year and the previous year, the Company has not obtained any registration from other financial sector regulators.


210



Rs. in lakhs

54

X)Rs. in lakhs


2020 As at

31 March 2019

Provisions for depreciation on Investment (146.33) (1,016.69) Provision towards non-performing assets 122,022.00 (111,011.91) Provision made towards Income tax 55,693.89 57,024.06 Other Provision and Contingencies (with details) (165.08) (827.27) Provision for diminution in the fair value of restructured advances - - Provision for Standard Assets - -

Draw Down from ReservesYear ended March 31, 2020 : NilYear ended March 31, 2019 : Nil

XI)a)

Rs. in lakhsParticulars As at

31 March 2020

As at 31 March

2019 Total Deposits of twenty largest depositors 44,606.16 40,098.03 Percentage of Deposits of twenty largest depositors to Total Deposits of the NBFC. 5.1% 6.7%

b)Rs. in lakhs


2020 As at

31 March 2019

Total Advances to twenty largest borrowers 73,391.51 86,229.26 Percentage of Advances to twenty largest borrowers to Total Advances of the NBFC 1.1% 1.4%

c)Rs. in lakhs


2020 As at

31 March 2019

E Total Exposure to twenty largest borrowers / customers 73,391.51 86,229.26 1.1% 1.4%

d)Rs. in lakhs


2020 As at

31 March 2019

Total Exposure to top four NPA accounts 6,705.44 8,870.67

Concentration of Advances

Concentration of Exposures

Concentration of NPAs

Percentage of Exposures to twenty largest borrowers / customers to Total Exposure of the NBFC onborrowers / customers

Provisions and Contingencies

Concentration of Deposits, Advances, Exposures and NPAsConcentration of Deposits (for deposit taking NBFCs)


Break up of 'Provisions and Contingencies' shown under the head Expenditure in Profit and Loss Account

211



Rs. in lakhs

54

XI)e)


2020 As at

31 March 2019

Percentage of NPAs to Total Advances in that sector

Percentage of NPAs to Total Advances in that sector

i) Agriculture & allied activities 10.7% 8.9%ii) Auto loans 7.8% 6.0%iii) MSME 7.6% 5.2%iv)Corporate borrowers 10.4% 3.7%v) Unsecured personal loans 1.7% 1.6%vi) Other personal loans - - vii) Services - -

f)Rs. in lakhs

As at 31 March

2020 As at

31 March 2019

i) Net NPAs to Net Advances (%) 5.98% 5.3%ii) Movement of NPAs (Gross) (a) Opening balance 407,056.68 502,697.70 (b) Additions during the year 326,085.80 196,269.02 (c)Reductions during the year (158,468.62) (291,910.04) (d)Closing balance 574,673.86 407,056.68 iii) Movement of Net NPAs (a) Opening balance 329,070.49 331,090.28 (b) Additions during the year 172,588.56 140,920.06 (c) Reductions during the year (105,011.64) (142,939.85) (d)Closing balance 396,647.41 329,070.49 iv) Movement of provisions for NPAs (excluding provisions on standard assets) (a) Opening balance 77,986.19 171,607.42 (b)Provisions made during the year 153,497.24 55,348.96 (c)Write-off / write-back of excess provisions (53,456.98) (148,970.19) (d)Closing balance 178,026.45 77,986.19

XII) Rs. in lakhs

Name of the Joint Venture/ Subsidiary Other Partner in the JV Country As at 31 March

2020 As at

31 March 2019

Mahindra Finance USA, LLC De Lage Landen Financial Services USA 395,636.17 360,470.90 Mahindra Ideal Finance Limited Ideal Finance Limited, Sri Lanka Sri Lanka 7,782.86 N/A

XIII)

Name of the SPV sponsored - Domestic OverseasN/A

Overseas Assets (for those with Joint Ventures and Subsidiaries abroad)

Total Assets

Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

N/A

Sector-wise NPAs

Movement of NPAs

Concentration of Deposits, Advances, Exposures and NPAs (Continued)


212



Rs. in lakhs

54

XIV)As at March 31, 2020

Rs. in lakhsParticulars Up to 30/31

daysOver 1 month

up to 2 monthsOver 2 months up to 3 months

Over 3 months up to 6 months

Over 6 months up to 1 year

Over 1 year up to 3 years


Over 5 years Total

10,480.14 10,738.50 12,923.85 40,811.75 90,484.34 608,000.72 107,774.68 - 881,213.98 540,634.79 42,040.84 236,176.26 589,818.93 1,103,255.45 3,115,566.24 864,779.92 7,074.61 6,499,347.04

- - - - - - - 1,124,078.54 1,124,078.54 324,812.99 1,187.38 1,306.39 2,686.68 5,115.37 10,794.26 7,600.75 237,592.80 591,096.62 164,054.50 53,999.64 224,886.33 420,435.91 832,285.21 1,838,976.41 492,681.02 745,624.65 4,772,943.67

- - - - - - - - - - - - - 18,294.06 273,778.84 - - 292,072.90

As at March 31, 2019Rs. in lakhs

Particulars Up to 30/31 days

Over 1 month up to 2 months



Over 6 months up to 1 year



Over 5 years Total

Deposits 10,294.70 12,280.52 10,181.56 37,170.58 67,093.38 365,355.07 64,342.60 - 566,718.41 Advances 677,857.57 253,427.37 217,580.89 517,840.42 1,000,944.34 2,756,627.06 698,528.03 2,157.12 6,124,962.80 Reserves & surplus - - - - - - - 1,078,504.75 1,078,504.75 Investments 76,100.26 7,198.15 110,825.62 18,529.85 6,121.13 7,795.30 5,446.76 147,153.30 379,170.37 Borrowings 151,738.31 229,814.73 147,144.48 464,617.25 742,686.06 1,848,990.24 368,974.44 563,208.52 4,517,174.03 Foreign Currency Assets - - - - - - - - -

- - - 16,208.14 47,195.83 137,396.77 - - 200,800.74

XV



681 315 (b) No. of complaints received during the year 10,002 3,041 (c) No. of complaints redressed during the year 8,990 2,675 (d) No. of complaints pending at the end of the year 1,693 681

Asset Liability Management Maturity pattern of certain items of Assets and Liabilities

Disclosure of complaintsCustomer complaints

DepositsAdvancesReserves & surplusInvestmentsBorrowingsForeign Currency AssetsForeign Currency liabilities

Foreign Currency liabilities

(a) No. of complaints pending at the beginning of the year


213


55

i)

Number of Significant

CounterpartiesAmount

(Rs. in lakhs)% of Total

deposits% of Total Liabilities

1 Deposits Nil Nil Nil Nil2 Borrowings 19 3,431,365.82 N/A 54.72%

ii)

Amount(Rs. in lakhs)

% of Total deposits

Total for Top 20 large deposits 44,606.16 5.06%

iii)


% of Total borrowings

Total for Top 10 borrowings 2,686,667.69 45.18%

iv)


% of Total liabilities

1 Non-convertible debentures (Secured) 1,739,521.31 27.74%2 Term loans from banks (including FCNR loans) 1,772,784.62 28.27%3 External Commercial Borrowings 273,778.83 4.37%4 Associated liabilities in respect of securitization transactions 888,170.82 14.16%5 Public deposits 881,213.98 14.05%6 Subordinated redeemable non-convertible debentures 341,794.57 5.45%

5,897,264.13 94.04%Funding Concentration pertaining to insignificant instruments/products 48,966.42 0.78%Total borrowings under all instruments/products 5,946,230.55 94.83%

v)


% of total public funds

% of total liabilities

% of total assets

a) Commercial papers (CPs) Nil Nil Nil Nil b) Non-convertible debentures (NCDs) with original maturity of less than one year Nil Nil Nil Nil c) Other short-term liabilities 226,238.34 3.80% 3.61% 3.05%

vi)

Name of the instrument/product

Top 10 borrowings (amount in Rs. in lakhs and % of total borrowings)

Disclosures as required under Guidelines on Liquidity Risk Management Framework for NBFCs issued by RBI videnotification no. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 dated 4 November 2019Public disclosure on liquidity risk :

Institutional set-up for liquidity risk management


Rs. in lakhs

Funding Concentration based on significant instrument/product

Sr. no. Name of the instrument/product

Description

Description

Funding Concentration based on significant counterparty (both deposits and borrowings)

Sr. no. Type of instrument

The ultimate responsibility for liquidity risk management rests with the Board of directors, which has established Asset and LiabilityManagement Committee (ALCO) for the management of the Company’s short, medium and long-term funding and liquidity managementrequirements. The ALCO meets regularly to review the liquidity position based on future cash flows. The Company manages liquidity risk bycontinuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities. The Companyalso maintains adequate liquid assets, banking facilities and reserve borrowing facilities to hedge against unexpected requirements.

In order to achieve above, the Company also has an Investment Policy to ensure that safety, liquidity and return on the surplus funds are givenappropriate weightages and are placed in that order of priority. The Investment Committee frames the strategy, sets the operational parametersand framework within the limits as may be set by the Board for investment. The Committee approaches the Board for revising the limit as andwhen required. The policy is also reviewed periodically in the background of developments in the money markets and the Investment Committeedepending on the external factors proactively to reduce the risk in the investments. A well-defined front and back office mechanism is in placeto ensure a system of checks and balances.

Top 20 large deposits (amount in Rs. in lakhs and % of total deposits)

Stock Ratios

Sr. no.

214



Rs. in lakhs

55

a)

b)

c)

d)

e) Other short-term liabilities: All short-term borrowings other than CPs and NCDs with original maturity less than 12 months.

Significant counterparty:A “Significant counterparty” is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate formore than 1% of the NBFC's total liabilities.Significant instrument/product:A "Significant instrument/product" is defined as a single instrument/product of group of similar instruments/products which in aggregate amount to more than 1% of the NBFC's total liabilities.

Public funds: “Public funds" includes funds raised either directly or indirectly through public deposits, inter-corporate deposits, bank finance and all fundsreceived from outside sources such as funds raised by issue of Commercial Papers, debentures etc. but excludes funds raised by issue ofinstruments compulsorily convertible into equity shares within a period not exceeding 5 years from the date of issue.It includes total borrowings outstanding under all types of instruments/products.

Definition of terms as used in the table above:

Total liabilities:Total liabilities include all external liabilities (other than equity).

Disclosures as required under Guidelines on Liquidity Risk Management Framework for NBFCs issued by RBI videnotification no. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 dated 4 November 2019 (Continued)

Public disclosure on liquidity risk (Continued) :

215


56

i)Rs . in lakhs

Asset classification as per Ind AS 109

Gross Carrying Amount as per

Ind AS Loss Allowances

(Provisions) as required under

Ind AS 109

Net Carrying Amount

Provisions required as per IRACP norms

Difference between Ind AS

109 provisions and IRACP

norms(2) (3) (4) (5 )= (3) - (4) (6) (7) = (4) - (6)

Performing AssetsStage 1 5,589,022.84 54,711.21 5,534,311.63 22,356.09 32,355.12 Stage 2 645,207.52 75,960.80 569,246.72 6,750.45 69,210.35

6,234,230.36 130,672.01 6,103,558.35 29,106.54 101,565.47 Non-Performing Assets (NPA)Substandard Stage 3 300,533.42 92,195.54 208,337.88 33,492.04 58,703.50

Doubtful - up to 1 year Stage 3 144,652.81 44,425.57 100,227.24 71,439.99 (27,014.42) 1 to 3 years Stage 3 102,056.70 25,763.50 76,293.20 82,955.08 (57,191.58) More than 3 years Stage 3 15,536.44 3,771.52 11,764.92 15,359.02 (11,587.50)

262,245.95 73,960.59 188,285.36 169,754.09 (95,793.50) Loss Stage 3 11,894.49 11,870.32 24.17 11,894.45 (24.13)

574,673.86 178,026.45 396,647.41 215,140.58 (37,114.13) Stage 1 - 250.20 (250.20) - 250.20 Stage 2 - - - - - Stage 3 - - - - -

- 250.20 (250.20) - 250.20 Stage 1 5,589,022.84 54,961.41 5,534,061.43 22,356.09 32,605.32 Stage 2 645,207.52 75,960.80 569,246.72 6,750.45 69,210.35 Stage 3 574,673.86 178,026.45 396,647.41 215,140.58 (37,114.13) Total 6,808,904.21 308,948.66 6,499,955.56 244,247.12 64,701.54

ii)

iii)

As at 31 March 2020, there are no loan accounts that are past due beyond 90 days but not treated as impaired, i.e. all 3+ ageing loan accounts havebeen classified as Stage-3 and no dispensation is considered in stage-3 classification.

The balance in the ‘Impairment Reserve’ (as and when created) shall not be reckoned for regulatory capital. Further, no withdrawals shall be permittedfrom this reserve without prior permission from the Department of Supervision, RBI.

Policy for sales / transfers out of amortized cost business model portfoliosSale/ transfer of portfolios out of amortized cost business model: As a short-term financing arrangement, the Company has been transferring or selling certain pools of fixed rate loan receivables backed by underlyingassets in the form of tractors, vehicles, equipments etc. by entering in to securitization transactions with the Special Purpose Vehicle Trusts ("SPVTrust") sponsored by Commercial banks for consideration received in cash at the inception of the transaction. As a part of annual budgetary planningand with the objective of better liquidity and risk management, the Company, at the beginning of the year, obtains approval of Asset LiabilityCommittee and Risk Management Committee of the Board of Directors for undertaking securitization transactions of certain value of standard assetscomprising the collateral based loan receivables at appropriate times during the year.

Total

Standard

Subtotal

In terms of recommendations as per above referred notification, the Company has adopted the same definition of default for accounting purposes asguided by the definition used for regulatory purposes.

Since the total impairment allowances under Ind AS 109 is higher than the total provisioning required under IRACP (including standard assetprovisioning) as at 31 March 2020, no amount is required to be transferred to ‘Impairment Reserve’. The gross carrying amount of asset as per Ind AS109 and Loss allowances (Provisions) thereon includes interest accrual on net carrying value of stage - 3 assets as permitted under Ind AS 109. While,the provisions required as per IRACP norms does not include any such interest as interest accrual on NPAs is not permitted under IRACP norms.


Rs. in lakhs

Other items such as guarantees, loan commitments, etc. which are in thescope of Ind AS 109 but not covered under current Income Recognition,Asset Classification and Provisioning (IRACP) norms

Subtotal for doubtful

Subtotal for standard

Subtotal for NPA

Asset Classification as per RBI Norms

Disclosure as required under RBI notification no. RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13 March 2020 on Implementation of Indian Accounting Standards

A comparison between provisions required under extant prudential norms on Income Recognition, Asset Classification and Provisioning(IRACP) and impairment allowances made under Ind AS 109 for the year ended 31 March 2020

(1)

216



Rs. in lakhs

56

iii)

Disclosure as required under RBI notification no. RBI/2019-20/170 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated 13 March 2020 on Implementation of Indian Accounting Standards (Continued)

Policy for sales / transfers out of amortized cost business model portfolios (continued)

Accordingly, these financial assets are not de-recognized by the Company from the financial statements prepared under Ind AS. Since the contractualterms of these financial assets give rise to cash flows, that are solely payments of principal and interest, on specified dates, these assets meet the SPPIcriterion and are thus continued to be recognized in the books at amortized cost.

When the assets in the form of loan receivables are sold / transferred to an SPV/Bank through securitization transaction, then on a consolidatedportfolio level, such sale/transfer does not change the Company's business objective of holding financial assets to collect contractual cash flows.

These transactions are carried out after complying with RBI guidelines on securitization of standard assets. The consideration received through suchsecuritization transactions is utilized for funding regular vehicle loan disbursements to customers who service their loans through fixed installmentsover a specified period of loan tenor. Besides using securitization as alternate financing tool, it is also being used as a effective Balance sheetmanagement through better liquidity and risk management by transfer of assets from risk averse to risk takers.

The Company remains exposed to credit risk, being the expected losses that will be incurred on the securitized loan portfolio to the extent of the creditenhancement provided. Any increase in losses as compared to the expected loss shall require the Company to present its credit enhancement / cashcollateral to help compensate the investors. This is as per the requirement of the Reserve Bank of India. Thus, the Company as per Ind AS 109 hasretained substantially all the risks and rewards of ownership of the financial asset.The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights toreceive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferredor in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financialasset. Accordingly, the securitized financial assets are derecognized from the financial statements prepared as per IRACP norms.

If the Company enters into transactions whereby it transfers assets recognized on its balance sheet, but retains either all or substantially all of the risksand rewards of the transferred assets, the transferred assets are not derecognized.

217

Notes forming part of the Financial Statements (Continued)for year ended 31 March 2020Rs. in lakhs57 Events after the reporting date


Mumbai Mumbai15 May 2020 15 May 2020


Consequent to the above, the shareholding of the Company in MAMCPL and MTCPL has come down from 100% to 51% of the share capitalrespectively, and accordingly, MAMCPL and MTCPL will cease to be wholly-owned subsidiaries of the Company but, continue to remain the Company'ssubsidiaries.There have been no other events after the reporting date that require disclosure in these financial statements.

During the year ended 31 March 2020, the Company along with Mahindra Asset Management Company Private Limited (MAMCPL) and MahindraTrustee Company Private Limited (MTCPL), wholly-owned subsidiaries of the Company, had entered in to a share subscription agreement andshareholders' agreement to form a 51:49 Joint Venture with Manulife Asset Management (Singapore) Pte. Ltd. (Manulife). Pursuant to these agreements,Manulife was required to make an equity investment aggregating to US $ 35.00 million to acquire 49% of the share capital of MAMCPL & MTCPL.

Signatures to Notes 1 to 57


The transaction was settled on 29 April 2020 in accordance with share subscription and shareholders' agreements to acquire a 49% stake in MIAMCPLand MTCPL by Manulife. The said agreements have also provided for sale of certain number of equity shares of MAMCPL by MMFSL at an agreedvaluation within the overall stake divestment of 49% to Manulife. Accordingly, under the sale transaction, 1,47,00,000 equity shares of MAMCPL,equivalent to 7% of the fully paid up equity share capital of MAMCPL, for a consideration of Rs. 2080.10 lakhs (equivalent to USD 2.73 million), havebeen transferred in dematerialized form to Manulife. This sale transaction has been recorded in the books of accounts on 29 April 2020.

As per our report of even date attached.For B S R & Co. LLP For and on behalf of the Board of DirectorsChartered Accountants Mahindra & Mahindra Financial Services LimitedFirm's Registration No:101248W/W-100022

Company SecretaryExecutive Director & Chief Financial Officer[DIN: 00307328]V. Ravi Arnavaz Pardiwalla


[DIN: 00220759]Dhananjay MungaleChairman[DIN: 00007563]

218


5th Floor, Lodha Excelus,

Telephone +91 (22) 4345 5300 Apollo Mills Compound N. M. Joshi Marg, Mahalaxmi Mumbai - 400 011 India

Fax +91 (22) 4345 5399

Independent Auditors’ Report To the Members of Mahindra & Mahindra Financial Services Limited Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Mahindra & Mahindra Financial Services Limited (hereinafter referred to as the “Holding Company”) and its subsidiaries (Holding Company and its subsidiaries together referred to as “the Group”) and its associate and its joint venture, which comprise the consolidated balance sheet as at 31 March 2020, and the consolidated statement of profit and loss (including other comprehensive income), consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the Consolidated Financial Statements”). In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of other auditors on separate financial statements of such subsidiaries, associate and joint venture as were audited by the other auditors, the aforesaid Consolidated Financial Statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group, its associate and joint venture as at 31 March 2020, of its consolidated profit and other comprehensive income, consolidated changes in equity and consolidated cash flows for the year then ended. Basis for Opinion We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India, and we have fulfilled our other ethical responsibilities in accordance with the provisions of the Act. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Registered Office: 5th Floor, Lodha Excelus Apollo Mills Compound N. M. Joshi Marg, Mahalaxmi Mumbai - 400 011. India

219

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Emphasis of Matter As described in Note 50.2(i) to the Consolidated Financial Statements, in respect of accounts overdue but standard at 29 February 2020 where moratorium benefit has been granted, the staging of those accounts at 31 March 2020 is based on the days past due status as on 29 February 2020 in accordance with the Reserve Bank of India COVID-19 Regulatory Package. Further, as described in Note 50.2(ii) to the Consolidated Financial Statements, the extent to which the COVID-19 pandemic will impact the Group’s financial performance is dependent on future developments, which are highly uncertain. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Consolidated Financial Statements of the current year. These matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Description of Key Audit Matter Impairment Loss Allowance Refer note 2.11(h) and 50.2 to the Consolidated Financial Statements

The key audit matter How the matter was addressed in our audit The Group has recognized impairment loss allowance of Rs. 366,900.65 lakhs as at 31 March 2020 and has recognized an expense for Rs. 142,960.16 lakhs in its statement of profit and loss. The determination of impairment loss allowance is inherently judgmental and relies on managements’ best estimate due to the following: Increased level of data inputs for capturing the historical

data to calculate the Probability of Default (‘PDs’) and Loss Given Default (“LGD”) and the completeness and accuracy of that data

Use of management overlays for considering the probability weighted scenarios, the forward looking macro-economic factors, economic environment and the timing of cash flows

Criteria selected to identify significant increase in credit risk, particularly in respect of moratorium benefit given to eligible borrowers, as per the Company’s board approved policy, read with the RBI COVID-19 regulatory package.

In relation to COVID-19 pandemic, judgements and assumptions include the extent and duration of the pandemic, the impacts of actions of governments and other authorities, and the responses of businesses and consumers in different industries, along with the associated impact on the global economy

We performed the following key audit procedures: Performed process walkthroughs to identify the key

systems, applications and controls used in the impairment allowance processes.

Assessed the design and implementation of controls in respect of the Company’s impairment allowance process such as the timely recognition of impairment loss, the completeness and accuracy of reports used in the impairment allowance process and management review processes over the calculation of impairment allowance and the related disclosures on credit risk management.

Obtained understanding of management’s revised processes, systems and controls implemented in relation to impairment allowance process, particularly in view of staging freeze as on 29 February 2020 as per board approved policy read with RBI COVID-19 regulatory package

Tested the relevant general IT and applications controls over key systems used in the impairment allowance processes.

Evaluated whether the methodology applied by the Company is compliant with the requirements of the relevant accounting standards and confirmed that the calculations are performed in accordance with the approved methodology, including checking mathematical accuracy of the workings.

220

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Key Audit Matters (Continued) Impairment Loss Allowance (Continued) Refer note 2.11(h) and 50.2 to the Consolidated Financial Statements (Continued)

The key audit matter How the matter was addressed in our audit The underlying forecasts and assumptions used in the estimates of impairment loss allowance are subject to uncertainties which are often outside the control of the Company. The extent to which the COVID-19 pandemic will impact the Company’s current estimate of impairment loss allowances is dependent on future developments, which are highly uncertain at this point. Given the size of loan portfolio relative to the balance sheet and the impact of impairment allowance on the financial statements, we have considered this as a key audit matter.

Tested the periods considered for capturing underlying data as base to PD and LGD calculations are in line with Company’s recent experience of past observed periods.

Tested the accuracy of the key inputs used in the calculation and independently evaluated the reasonableness of the assumptions made.

Challenged completeness and validity of management overlays, particularly in response to COVID-19 with assistance of our financial risk modelling experts by critically evaluating the risks that have been addressed by management through overlays and also considering whether there are other risks not captured which require additional overlays. We also tested management’s workings supporting the overlay quantum.

Assessed whether the disclosures on key judgements, assumptions and quantitative data with respect to impairment loss allowance in the financial statements are appropriate and sufficient.

Other Information The Holding Company’s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Holding Company’s annual report but does not include the financial statements and our auditors’ report thereon. Our opinion on the Consolidated Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the Consolidated Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Consolidated Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed and based on the audit report of other auditors, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements The Holding Company’s management and Board of Directors are responsible for the preparation and presentation of these Consolidated Financial Statements in term of the requirements of the Act that give a true and fair view of the consolidated state of affairs, consolidated profit and other comprehensive income, consolidated statement of changes in equity and consolidated cash flows of the Group including its associate and joint venture in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. 221

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements (Continued) The respective Board of Directors of the companies included in the Group and of its associate and joint venture are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of each company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Consolidated Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the Consolidated Financial Statements by the Directors of the Holding Company, as aforesaid. In preparing the Consolidated Financial Statements, the respective management and Board of Directors of the companies included in the Group and of its associate and joint venture are responsible for assessing the ability of each company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The respective Board of Directors of the companies included in the Group and of its associate and joint venture is responsible for overseeing the financial reporting process of each company. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Consolidated Financial Statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the Consolidated Financial Statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

222

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements (Continued) Conclude on the appropriateness of management’s use of the going concern basis of accounting in

preparation of Consolidated Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the appropriateness of this assumption. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Consolidated Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group (the Company and subsidiaries) as well as associate and joint venture to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the Consolidated Financial Statements, including the disclosures, and whether the Consolidated Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of such entities or business activities within the Group and its associate and joint venture to express an opinion on the Consolidated Financial Statements, of which we are the independent auditors. We are responsible for the direction, supervision and performance of the audit of financial information of such entities. For the other entities included in the Consolidated Financial Statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in para (a) of the section titled ‘Other Matters’ in this audit report.

We believe that the audit evidence obtained by us along with the consideration of audit reports of the other auditors referred to in sub-paragraph (a) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Consolidated Financial Statements. We communicate with those charged with governance of the Holding Company and such other entities included in the Consolidated Financial Statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Consolidated Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

223

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Other Matters (a) We did not audit the financial statements of six subsidiaries, whose financial statements reflect

total assets of Rs. 68,044.36 lakhs as at 31 March 2020, total revenues of Rs. 35,874.22 lakhs and net cash flows amounting to Rs. 770.45 lakhs for the year ended on that date, as considered in the Consolidated Financial Statements. These financial information have been audited by other auditors whose reports have been furnished to us by Management and our opinion on the Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries is based solely on the audit reports of the other auditors.

(b) The Consolidated Financial Statements also include the Group’s share of net profit (and other comprehensive income) of Rs. 4,589.73 lakhs for the year ended 31 March 2020, as considered in the Consolidated Financial Statements, in respect of one associate and one joint venture, whose financial information have not been audited by us or by other auditors. These unaudited financial information have been furnished to us by Management and our opinion on the Consolidated Financial Statements, in so far as it relates to the amounts and disclosures included in respect of these associate and joint venture, and our report in terms of sub-sections (3) of Section 143 of the Act in so far as it relates to the aforesaid associate and joint venture, is based solely on such unaudited financial information. In our opinion and according to the information and explanations given to us by the Management, these financial information are not material to the Group.

Our opinion on the Consolidated Financial Statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial information certified by the Management. Report on Other Legal and Regulatory Requirements (A) As required by Section 143(3) of the Act, based on our audit and on the consideration of reports

of the other auditors on separate financial statements of such subsidiaries as were audited by other auditors, as noted in the ‘Other Matters’ paragraph, we report, to the extent applicable, that: a) We have sought and obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purposes of our audit of the aforesaid Consolidated Financial Statements;

b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid Consolidated Financial Statements have been kept so far as it appears from our examination of those books and the reports of the other auditors;

c) The consolidated balance sheet, the consolidated statement of profit and loss (including other comprehensive income), the consolidated statement of changes in equity and the consolidated statement of cash flows dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the Consolidated Financial Statements.

d) In our opinion, the aforesaid Consolidated Financial Statements comply with the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from the directors of the Holding Company as on 31 March 2020 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies incorporated in India, none of the directors of the Group companies, incorporated in India is disqualified as on 31 March 2020 from being appointed as a director in terms of Section 164(2) of the Act.

224

B S R & Co. LLP Independent Auditors’ Report (Continued) Mahindra & Mahindra Financial Services Limited Report on Other Legal and Regulatory Requirements (Continued)

f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Holding Company, its subsidiary companies incorporated in India and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”.

(B) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors on separate financial statements of the subsidiaries, associate and joint ventures as noted in the ‘Other Matters’ paragraph: i. The Consolidated Financial Statements disclose the impact of pending litigations as at 31

March 2020 on the consolidated financial position of the Group, its associate and joint venture - Refer Note 43 to the Consolidated Financial Statements.

ii. Provision has been made in the Consolidated Financial Statements, as required under the applicable law or Ind AS, for material foreseeable losses, on long-term contracts including derivative contracts. Refer Note 47 to the Consolidated Financial Statements in respect of such items as it relates to the Group, its associate and joint venture.

iii. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Holding Company or its subsidiary companies incorporated in India during the year ended 31 March 2020.

(C) With respect to the matter to be included in the Auditors’ Report under section 197(16): In our opinion and according to the information and explanations given to us and based on the reports of the statutory auditors of such subsidiary companies incorporated in India which were not audited by us, the remuneration paid during the current year by the Holding Company and its subsidiary companies to its directors is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director by the Holding Company and its subsidiary companies is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.


Mumbai Membership No: 113156 15 May 2020 ICAI UDIN: 20113156AAAACN4391

225

B S R & Co. LLP Annexure A to the Independent Auditors’ report on the Consolidated Financial Statements of Mahindra & Mahindra Financial Services Limited for the year ended 31 March 2020 Report on the internal financial controls with reference to the aforesaid consolidated financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 Referred to in paragraph A(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date Opinion In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended 31 March 2020, we have audited the internal financial controls with reference to consolidated financial statements of Mahindra & Mahindra Financial Services Limited (hereinafter referred to as “the Holding Company”) and such companies incorporated in India under the Companies Act, 2013 which are its subsidiary companies as of that date. In our opinion, the Holding Company and such companies incorporated in India which are its subsidiary companies, have, in all material respects, adequate internal financial controls with reference to consolidated financial statements and such internal financial controls were operating effectively as at 31 March 2020, based on the internal financial controls with reference to consolidated financial statements criteria established by such companies considering the essential components of such internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the “Guidance Note”). Management’s Responsibility for Internal Financial Controls The respective Company’s management and the Board of Directors are responsible for establishing and maintaining internal financial controls with reference to consolidated financial statements based on the criteria established by the respective Company considering the essential components of internal control stated in the Guidance Note. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (hereinafter referred to as “the Act”). Auditors’ Responsibility Our responsibility is to express an opinion on the internal financial controls with reference to consolidated financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to consolidated financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to consolidated financial statements were established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to consolidated financial statements and their operating effectiveness. Our audit of internal financial controls with reference to consolidated financial statements included obtaining an understanding of internal financial controls with reference to consolidated financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of the internal controls based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.

226

B S R & Co. LLP Annexure A to the Independent Auditors’ report on the Consolidated Financial Statements of Mahindra & Mahindra Financial Services Limited for the year ended 31 March 2020 (Continued) Auditors’ Responsibility (Continued) We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors of the relevant subsidiary companies, in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls with reference to consolidated financial statements. Meaning of Internal Financial controls with Reference to Consolidated Financial Statements A company's internal financial controls with reference to consolidated financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial controls with reference to consolidated financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial controls with Reference to Consolidated Financial Statements Because of the inherent limitations of internal financial controls with reference to consolidated financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to consolidated financial statements to future periods are subject to the risk that the internal financial controls with reference to consolidated financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Other Matters Our aforesaid reports under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls with reference to consolidated financial statements insofar as it relates to six subsidiary companies, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies incorporated in India.

For B S R & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022 Venkataramanan Vishwanath Mumbai Partner 15 May 2020 Membership No: 113156

ICAI UDIN: 20113156AAAACN4391 227

as at 31 March 2020

Note As at 31 March 2020

As at 31 March 2019

a) Cash and cash equivalents 3 78,260.23 53,722.32 b) Bank balance other than (a) above 4 74,899.44 45,681.43 c) Derivative financial instruments 5 9,292.76 1,006.39 d) Receivables

i) Trade receivables 6 5,291.06 5,360.31 ii) Other receivables - -

e) Loans 7 72,86,378.45 68,93,899.97 f) Investments 8 5,34,035.78 3,32,735.30 g) Other financial assets 9 51,978.71 21,207.08

80,40,136.43 73,53,612.80 a) Current tax assets (Net) 25,783.00 31,212.81 b) Deferred tax Assets (Net) 10 (i) 57,883.42 44,969.75 c) Property, plant and equipment 11 42,775.57 16,818.54 d) Intangible assets under development 55.68 79.41 e) Other intangible assets 12 2,760.26 3,326.44 f) Other non-financial assets 13 9,863.45 7,577.16

1,39,121.38 1,03,984.11 81,79,257.81 74,57,596.91

a) Derivative financial instruments 14 4,016.06 7,702.53 b) Payables 15

I) Trade Payables 25.61 23.72 69,297.22 1,11,406.58

II) Other Payables 17.40 253.29 2,944.47 3,164.54

c) Debt Securities 16 19,74,461.07 24,71,588.50 d) Borrowings (Other than Debt Securities) 17 33,32,713.60 24,63,272.12 e) Deposits 18 8,78,138.98 5,63,093.41 f) Subordinated Liabilities 19 3,78,110.37 3,82,208.09 g) Other financial liabilities 20 2,99,417.34 2,84,074.55

69,39,142.12 62,86,787.33 a) Current tax liabilities (Net) 1,737.93 1,392.09 b) Provisions 21 21,138.99 25,493.93 c) Other non-financial liabilities 22 11,370.10 9,170.85

34,247.02 36,056.87 23

a) Equity Share capital 12,306.95 12,297.54 b) Other Equity 11,84,593.52 11,14,604.29

Equity attributable to owners of the Company 11,96,900.47 11,26,901.83 Non-controlling interests 8,968.20 7,850.88

12,05,868.67 11,34,752.71 81,79,257.81 74,57,596.91

Non-financial Assets

Total Liabilities and Equity

Financial Liabilities

Non-Financial Liabilities

EQUITY

Total Assets

ii) total outstanding dues of creditors other than micro enterprises and small enterprises

i) total outstanding dues of micro enterprises and small enterprises

LIABILITIES AND EQUITY

Consolidated Balance Sheet

Rs. in lakhsParticulars

ASSETSFinancial Assets


LIABILITIES

i) total outstanding dues of micro enterprises and small enterprises


228

as at 31 March 2020

1 to 55

Ramesh Iyer



As per our report of even date attached.The accompanying notes form an integral part of the consolidated financial statements.Rs. in lakhs

For B S R & Co. LLP For and on behalf of the Board of DirectorsMahindra & Mahindra Financial Services Limited

Vice-Chairman & Managing Director[DIN: 00220759]

V. RaviExecutive Director & Chief Financial Officer[DIN: 00307328]

Consolidated Balance Sheet (Continued)

Dhananjay Mungale

Chartered AccountantsFirm's Registration No:101248W/W-100022

Venkataramanan VishwanathPartnerMembership No: 113156

Chairman[DIN: 00007563]


229


Particulars Note Year ended31 March 2020


Revenue from operationsi) Interest income 24 11,45,761.28 9,96,952.90 ii) Dividend income 2,715.21 1,524.27 iii) Rental income 874.93 71.45 iv) Fees and commission Income 25 10,413.36 11,638.82 v) Net gain on fair value changes 26 2,561.56 761.75 vi) Sale of services 27 25,968.81 26,220.90 I Total Revenue from operations 11,88,295.15 10,37,170.09 II Other income 28 11,350.46 5,915.38 III Total income (I+II) 11,99,645.61 10,43,085.47

Expensesi) Finance costs 29 5,39,056.37 4,43,227.98 ii) Fees and commission expense 12,489.86 12,968.10 iii) Impairment on financial instruments 30 2,31,897.83 71,710.83 iv) Employee benefits expenses 31 1,60,982.02 1,47,794.76 v) Depreciation, amortization and impairment 32 14,687.38 7,553.32 vi) Others expenses 33 84,918.91 80,447.20

IV Total expenses (IV) 10,44,032.37 7,63,702.19 V Profit before share of profit of associate and joint venture and tax (III-IV) 1,55,613.24 2,79,383.28 VI Share of Profit of Associate and Joint Venture 4,589.73 4,692.88 VII Profit before tax (V -VI ) 1,60,202.97 2,84,076.16 VIII Tax expense : 10 (ii)

(i) Current tax 64,730.05 70,650.27 (ii) Deferred tax (12,989.05) 26,211.44 (iii) (Excess) / Short Provision for Income Tax - earlier years (119.80) 486.26

51,621.20 97,347.97 IX Profit for the year (VII-VIII) 1,08,581.77 1,86,728.19 X Other Comprehensive Income (OCI)

(A)(1,581.38) (1,481.98)

268.65 454.65 10 (iii) 40.59 353.97

Subtotal (A) (1,272.14) (673.36) (B)

3,900.25 2,398.78 767.09 788.52

10 (iii) (115.97) (275.54) Subtotal (B) 4,551.37 2,911.76 Other Comprehensive Income (A + B) 3,279.23 2,238.40

XI 1,11,861.00 1,88,966.59

1,07,514.53 1,82,729.83 1,067.24 3,998.36

1,08,581.77 1,86,728.19

3,323.67 2,252.51 (44.44) (14.11)

3,279.23 2,238.40

1,10,838.20 1,84,982.34 1,022.80 3,984.25

1,11,861.00 1,88,966.59 XII 34

17.48 29.73 17.44 29.67

Mahindra & Mahindra Financial Services LimitedConsolidated Statement of profit and loss

Rs. in lakhs

-Exchange differences in translating the financial statements of foreign operations(i) Items that will be reclassified to profit or loss

(ii) Income tax impact thereon -Net gain / (loss) on equity instruments through OCI(i) Items that will not be reclassified to profit or loss -Remeasurement gain / (loss) on defined benefit plans

-Net gain / (loss) on debt instruments through OCI(ii) Income tax impact thereon

Total Comprehensive Income for the year (IX+X) Profit for the year attributable to:

Other Comprehensive Income for the year attributable to:Owners of the CompanyNon-controlling interests

Total Comprehensive Income for the year attributable

Owners of the CompanyNon-controlling interests

Owners of the CompanyNon-controlling interests

Basic (Rupees)Diluted (Rupees)Earnings per equity share (Face value Rs.2/- per equity share)

230


1 to 55

Venkataramanan Vishwanath Dhananjay Mungale Ramesh IyerChairman[DIN: 00007563]

V. Ravi Arnavaz PardiwallaCompany Secretary


The accompanying notes form an integral part of the consolidated financial statements.

Mahindra & Mahindra Financial Services LimitedConsolidated Statement of profit and loss (Continued)

Firm's Registration No:101248W/W-100022


As per our report of even date attached.For B S R & Co. LLPChartered Accountants


Rs. in lakhs



231

Consolidated Statement of Changes in Equityfor year ended 31 March 2020

A. Equity Share CapitalRs. in lakhs

Particulars Amount Issued, Subscribed and fully paid up: Balance as at 1 April 2018 12,289.54 Changes during the year:Allotment of shares by ESOS Trust to employees 8.00 Balance as at 31 March 2019 12,297.54 Balance as at 1 April 2019 12,297.54 Changes during the year:Allotment of shares by ESOS Trust to employees 9.41 Balance as at 31 March 2020 12,306.95

Statutoryreserves as per

Section 45-IC of the RBI Act,

1934

Capital redemption

reservesSecurities premium

reserveGeneral reserves

Debenture Redemption

Reserves (DRR)

Employee stock options

outstandingRetained

earnings or Profit & loss

account

Debt instruments

through OCIEquity

instruments through OCI

Foreign Currency

Translation Reserve

Balance as at 1 April 2018 1,50,106.01 5,000.00 4,14,146.15 65,727.62 7,702.98 2,227.61 3,28,249.89 - - 50.63 9,73,210.89 14,509.79 9,87,720.68 Profit for the year 1,82,729.83 1,82,729.83 3,998.36 1,86,728.19 Other Comprehensive Income (955.02) 512.98 295.78 2,398.77 2,252.51 (14.11) 2,238.40 Total Comprehensive Income - - - - - - 1,81,774.81 512.98 295.78 2,398.77 1,84,982.34 3,984.25 1,88,966.59 Dividend paid on equity shares (including tax thereon) (29,661.39) (29,661.39) (29,661.39) Expenses incurred in respect of issue of equity shares (10.41) (10.41) (10.41) Transfers to Securities premium on exercise of employee stock options 1,066.44 (1,066.44) - - Employee stock options expired 4.91 (4.91) - - Share based payment expense - 2,503.52 2,503.52 2,503.52 Transfers to Statutory reserves 38,517.00 (38,517.00) - - Transfers to General reserves 15,571.00 (15,571.00) - - Transfers to Debenture redemption reserves 14,667.61 (14,667.61) - - Changes in Group's Interest 233.60 233.60 Gross obligation at fair value to acquire non-controlling interest (15,865.28) (15,865.28) (15,865.28) Transaction with non-controlling interest (558.77) 3.39 - (555.38) (10,876.76) (11,432.14)

- Balance as at 31 March 2019 1,88,064.24 5,000.00 4,15,212.59 81,306.92 22,370.59 3,659.78 3,95,732.01 512.98 295.78 2,449.40 11,14,604.29 7,850.88 11,22,455.17

Non-controlling Interests

TotalTotal Other Equity


Rs. in lakhs

Reserves and Surplus Item of Other Comprehensive Income

232

Consolidated Statement of Changes in Equity (Continued)for year ended 31 March 2020

A. Equity Share Capital (Continued)Particulars

Statutoryreserves as per

Section 45-IC of the RBI Act,

1934

Capital redemption

reservesSecurities premium

reserveGeneral reserves

Debenture Redemption

Reserves (DRR)

Employee stock options

outstandingRetained earnings Debt

instruments through OCI


Foreign Currency Translation Reserve

Balance as at 1 April 2019 1,88,064.24 5,000.00 4,15,212.59 81,306.92 22,370.59 3,659.78 3,95,732.01 512.98 295.78 2,449.40 11,14,604.29 7,850.88 11,22,455.17 Profit for the year 1,07,514.53 1,07,514.53 1,067.24 1,08,581.77 Other Comprehensive Income (1,473.18) 651.12 245.48 3,900.25 3,323.67 (44.44) 3,279.23 Total Comprehensive Income - - - - - - 1,06,041.35 651.12 245.48 3,900.25 1,10,838.20 1,022.80 1,11,861.00

Dividend paid on equity shares (including tax thereon) (48,425.89) (48,425.89) (48,425.89) Transfers to Securities premium on exercise of employee stock options 1,462.56 (1,462.56) - - Employee stock options expired 7.54 (7.54) - - Share based payment expense - 3,180.77 3,180.77 3,180.77 Transfers to Statutory reserves 22,279.00 (22,279.00) - - Transfers from Debenture Redemption Reserve (refer note no. 23) (22,370.59) 22,370.59 - - Changes in Group's Interest - 94.52 94.52 Gross obligation at fair value to acquire non-controlling interest 4,357.53 4,357.53 4,357.53 Others 38.62 38.62 38.62 Balance as at 31 March 2020 2,10,343.24 5,000.00 4,16,713.77 81,314.46 - 5,370.45 4,57,796.59 1,164.10 541.26 6,349.65 11,84,593.52 8,968.20 11,93,561.72

The accompanying notes 1 to 55 form an integral part of the financial statements.As per our report of even date attached.




Rs. in lakhs


Total Other Equity Non-controlling Interests

Reserves and Surplus

For B S R & Co. LLPChartered AccountantsFirm's Registration No:101248W/W-100022



[DIN: 00220759]

TotalItem of Other Comprehensive Income

Dhananjay Mungale




V. Ravi

233

Consolidated Statement of Cash Flows for year ended 31 March 2020



A)1,55,613.24 2,79,383.28

14,687.38 7,553.34 1,48,475.29 (1,04,665.86)

83,736.68 1,76,376.70 (11,972.85) 2,693.63 19,173.16 826.29

(17.57) (4.03) 3,175.41 2,430.56

2,57,257.50 85,210.63

(2,561.05) (710.34) (13,854.42) (19,226.46)

(2,636.52) (1,511.34) (45.20) (67.82)

(5,093.66) 56.72 (24,190.85) (21,459.24)

I 3,88,679.89 3,43,134.67

(6,19,739.85) (15,03,646.33) 203.21 (4,024.30)

(3,667.81) 311.77 2,423.07 (3,649.28)

20,673.70 33,244.22 (946.56) (2,451.62)

(35,972.66) 215.15 1,115.29 2,253.25

- 1,427.65 (5,456.68) 7,780.20

II (6,41,368.29) (14,68,539.29) (58,834.60) (82,389.37)

(3,11,523.00) (12,07,793.99) B)

(11,826.83) (13,550.99) 216.97 213.35

(5,92,357.86) (44,869.94) 5,88,377.31 1,24,063.95 (24,389.29) (300.00)

(73,04,128.98) (34,76,945.36) 71,47,407.36 33,06,075.83

(33,077.17) (963.21) (58,312.37) (37,802.46)

6,379.28 3,648.21 9,825.09 19,138.27 2,976.27 (12.54)

(2,68,910.22) (1,21,304.89)

Net loss in fair value of derivative financial instruments Unrealised foreign exchange gain/loss

Income from investing activitiesDividend incomeNet gain on derecognition of property, plant and equipmentNet gain on sale investments

Operating profit before working capital changes

Remeasurement gain / (loss) on defined benefit plansShare based payments to employees

Less: Income considered separatelyNet gain on fair value changes


Rs. in lakhs

CASH FLOW FROM OPERATING ACTIVITIESProfit before exceptional items and taxesAdjustments to reconcile profit before tax to net cash flows:Add: Non-cash expensesDepreciation, amortization and impairmentImpairment on financial instrumentsBad debts and write offs

Trade PayablesOther non-financial liabilitiesDerivative financial instruments

Changes in - LoansTrade receivablesInterest accrued on other depositsOther financial assetsOther non-financial assetsOther financial liabilities

Proceeds from sale of Property, plant and equipmentPurchase of investments at amortised costProceeds from sale of investments at amortised costPurchase of investments at FVOCI

ProvisionsCash used in operationsIncome taxes paid (net of refunds)NET CASH USED IN OPERATING ACTIVITIES (A)CASH FLOW FROM INVESTING ACTIVITIESPurchase of Property, plant and equipment and intangible assets

Proceeds from term deposits with banks (net)Dividend income receivedInterest income received on investments measured at amortised cost, FVOCI, FVTPL and at costIncrease in Earmarked balances with banksNET CASH GENERATED FROM / (USED IN) INVESTING ACTIVITIES (B)

Purchase of investments at FVTPLProceeds from sale of investments at FVTPLPurchase of investments at cost

234

Consolidated Statement of Cash Flows (Continued)for year ended 31 March 2020



C)- (10.93) - (2,143.51)

14,17,780.00 34,80,912.24 (19,15,431.40) (32,01,672.60) 30,67,768.81 31,52,262.34

(21,96,458.97) (23,41,343.42) 10,000.00 37,187.23

(13,976.88) (1,680.00) (22,600.50) (2,205.46)

3,14,373.92 2,59,800.55 (4,802.62) -

(51,681.23) (32,153.90) 6,04,971.13 13,48,952.54

24,537.91 19,853.66 53,722.32 33,868.66 78,260.23 53,722.32

Particulars1,519.28 4,366.26

409.04 1,601.77 56,331.91 47,754.29 20,000.00 - 78,260.23 53,722.32

Venkataramanan Vishwanath Dhananjay Mungale Ramesh Iyer


Company Secretary

Chartered Accountants Mahindra & Mahindra Financial Services LimitedFirm's Registration No:101248W/W-100022


As per our report of even date attached.For B S R & Co. LLP For and on behalf of the Board of Directors



V. RaviExecutive Director & Chief Financial Officer [DIN: 00307328]

CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of Equity shares (net of issue expenses)Expenses incurred on issuance of Non-convertible debenturesProceeds from borrowings through Debt Securities

Payments for principal portion of lease liability

Arnavaz Pardiwalla

The above Cash Flow Statement has been prepared under the 'Indirect method' as set out in Ind AS 7 on 'Statement of Cash Flows'.


Rs. in lakhs

(Decrease) / Increase in loans repayable on demand and cash credit/overdraft facilities with banks (net)Increase / (decrease) in Fixed deposits (net)Dividend paid (including tax on dividend)NET CASH GENERATED FROM / (USED IN) FINANCING ACTIVITIES (C)NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C)

Repayment of borrowings through Debt SecuritiesProceeds from Borrowings (Other than Debt Securities)Repayment of Borrowings (Other than Debt Securities)Proceeds from borrowings through Subordinated LiabilitiesRepayment of borrowings through Subordinated Liabilities

- Cheques and drafts on hand - Balances with banks in current accounts -Term deposits with original maturity up to 3 monthsTotal

Notes :

Cash and Cash Equivalents at the beginning of the yearCASH AND CASH EQUIVALENTS AT THE END OF THE YEARComponents of Cash and Cash Equivalents

Cash and cash equivalents at the end of the year - Cash on hand

235

Notes to the Consolidated Financial Statementsfor the year ended 31 March 2020

1

22.1

2.2

2.3

2.4

Basis of measurement

Basis of consolidation

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments which aremeasured at fair values as required by relevant Ind AS.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been approved by the Company's Board of Directors and authorized for issue on 15 May 2020.Any application guidance/ clarifications/ directions issued by RBI or other regulators are implemented as and when they are issued/applicable.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have the rights to the net assets of thearrangement. Investment in joint ventures are accounted for using the equity method of accounting, after initially being recognised at cost.


Rs. in lakhs

COMPANY INFORMATIONMahindra & Mahindra Financial Services Limited (‘the Company’), is a public limited company, headquartered in Mumbai, India andincorporated under the provisions of the Companies Act, 1956. The Company is a Non-Banking Financial Company (’NBFC’) engaged inproviding asset finance through its pan India branch network. The Company is registered as a Systemically Important Deposit AcceptingNBFC as defined under Section 45-IA of the Reserve Bank of India (’RBI’) Act, 1934 with effect from 4 September 1998. The Equityshares of the Company are listed on the National Stock Exchange ("NSE") and the Bombay Stock Exchange ("BSE") in India. The Companyis a subsidiary of Mahindra & Mahindra Limited.The Company's registered office is at Gateway Building, Apollo Bunder, Mumbai 400001, India.

Functional and presentation currencyThese financial statements are presented in Indian Rupees ('INR' or 'Rs.') which is also the functional currency of the Group. All amounts arerounded-off to the nearest lakhs, unless otherwise indicated.

Statement of compliance and basis for preparation and presentation of financial statementsThe consolidated financial statements of Mahindra & Mahindra Financial Services Limited and its subsidiaries ('the Group') and its associateand joint venture have been prepared in accordance with the Indian Accounting Standards as per the Companies (Indian AccountingStandards) Rules 2015 as amended and notified under section 133 of the Companies Act, 2013 (“the Act”), in conformity with theaccounting principles generally accepted in India and other relevant provisions of the Act.

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries, associate and joint venture.Subsidiaries

AssociatesAssociates are the entities over which the Group has significant influence. Investment in associates are accounted for using the equitymethod of accounting, after initially being recognised at cost.

Subsidiaries are entities over which the Group has control. Subsidiaries are consolidated on a line-by-line basis from the date the control istransferred to the Group. They are deconsolidated from the date that control ceases. Changes in the Group's interest in subsidiaries that donot result in a loss of control are accounted as equity transactions. The carrying amount of the Company's interests and the non-controllinginterests ("NCI") are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount bywhich the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity andattributed to owners of the Company.Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses arealso eliminated unless the transaction provides evidence of an impairment of the asset transferred. These financial statements are prepared byapplying uniform accounting policies in use at the Group.

Joint venture

236

Notes to the Consolidated Financial Statements (Continued)for the year ended 31 March 2020

22.5

2.6

Provision for income tax and deferred tax assets:The Group uses estimates and judgments based on the relevant rulings in the areas of allocation of revenue, costs, allowances anddisallowances which is exercised while determining the provision for income tax, including the amount expected to be paid/recovered foruncertain tax postions. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available againstwhich the deductible temporary differences and tax losses can be utilised. Accordingly, the Group exercises its judgment to reassess thecarrying amount of deferred tax assets at the end of each reporting period.

Following are areas that involved a higher degree of estimate and judgment or complexity in determining the carrying amount of some assetsand liabilities.


Rs. in lakhs

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Provisions and other contingent liabilitiesThe reliable measure of the amounts pertaining to litigations and the regulatory proceedings in the ordinary course of the Group’s businessare disclosed as contingent liabilities.Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of futureevents that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.

Measurement of fair values A number of Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assetsand liabilities.The Group has established policies and procedures with respect to the measurement of fair values.Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: - Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. - Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. - Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Use of estimates and judgments and Estimation uncertaintyIn preparing these financial statements, management has made judgments, estimates and assumptions that affect the application of theGroup’s accounting policies and the reported amounts of assets, liabilities, income, expenses and the disclosures of contingent assets andliabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto estimates are recognised prospectively.The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant riskof causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. TheGroup based its assumptions and estimates on parameters available when the financial statements were issued. Existing circumstances andassumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control ofthe Group. Such changes are reflected in the assumptions when they occur.

Effective Interest Rate (EIR) MethodThe Group recognizes interest income / expense using a rate of return that represents the best estimate of a constant rate of return over theexpected life of the loans given / taken. This estimation, by nature, requires an element of judgment regarding the expected behavior and life-cycle of the instruments, as well as expected changes to other fee income/expense that are integral parts of the instrument.Impairment of Financial AssetsThe measurement of impairment losses on loan assets and commitments, requires judgment, in estimating the amount and timing of futurecash flows and recoverability of collateral values while determining the impairment losses and assessing a significant increase in credit risk. The Group’s Expected Credit Loss (ECL) calculation is the output of a complex model with a number of underlying assumptions regardingthe choice of variable inputs and their interdependencies. Elements of the ECL model that are considered accounting judgments andestimates include:- The Group’s criteria for assessing if there has been a significant increase in credit risk- The segmentation of financial assets when their ECL is assessed on a collective basis- Development of ECL model, including the various formulae and the choice of inputs- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into the ECL model- Management overlay used in circumstances where management judges that the existing inputs, assumptions and model techniques do notcapture all the risk factors relevant to the Company's lending portfolios.It has been the Group’s policy to regularly review its model in the context of actual loss experience and adjust when necessary (refer note50).

237


2


Rs. in lakhs

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)2.6

2.7a)Revenue recognition :

Recognition of interest income on loansEffective Interest Rate (EIR) method - Interest income is recognised in Statement of profit and loss using the effective interest method for all financial instruments measured atamortised cost, debt instruments measured at FVOCI and debt instruments designated at FVTPL. The ‘effective interest rate’ is the ratethat exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. The calculation of the effective interest rate includes transaction costs and fees that are an integral part of the contract. Transaction costsinclude incremental costs that are directly attributable to the acquisition of financial asset.If expectations regarding the cash flows on the financial asset are revised for reasons other than credit risk, the adjustment is recorded asa positive or negative adjustment to the carrying amount of the asset in the balance sheet with an increase or reduction in interestincome. The adjustment is subsequently amortised through Interest income in the Statement of profit and loss.

The Group calculates interest income related to financing business by applying the EIR to the gross carrying amount of financial assetsother than credit-impaired assets.When a financial asset becomes credit-impaired, the Group calculates interest income by applying the effective interest rate to the netamortised cost of the financial asset. If the financial assets cures and is no longer credit-impaired, the Group reverts to calculatinginterest income on a gross basis.Additional interest and interest on trade advances, are recognised when they become measurable and when it is not unreasonable toexpect their ultimate collection. Income from bill discounting is recognised over the tenure of the instrument so as to provide a constant periodic rate of return.

Estimation uncertainty relating to the global health pandemic from COVID-19:The estimation uncertainty is associated with:- the extent and duration of the disruption to business arising from the actions by governments, businesses and consumers to contain the

spread of the virus;- the extent and duration of the expected economic downturn (and forecasts for key economic factors including GDP, employment and

house prices). This includes the disruption to capital markets, deteriorating credit, liquidity concerns, increasing unemployment, declines inconsumer discretionary spending, reductions in production because of decreased demand, and other restructuring activities; and- the effectiveness of government and central bank measures that have and will be put in place to support businesses and consumers through

this disruption and economic downturn.The Group has developed various accounting estimates in these Financial Statements based on forecasts of economic conditions whichreflect expectations and assumptions as at 31 March 2020 about future events that the Management believe are reasonable in thecircumstances. There is a considerable degree of judgment involved in preparing forecasts. The underlying assumptions are also subject touncertainties which are often outside the control of the Group. Accordingly, actual economic conditions are likely to be different from thoseforecast since anticipated events frequently do not occur as expected, and the effect of those differences may significantly impact accountingestimates included in these financial statements.The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected creditlosses, fair value measurement, and recoverable amount assessments of non-financial assets.The impact of the COVID-19 pandemic on each of these accounting estimates is discussed further in the relevant note to these consolidatedFinancial Statements. The impact of COVID-19 on the Group's financial statements may differ from that estimated as at the date of approvalof these consolidated financial statements and the Group will continue to closely monitor any material changes to future economic conditions(refer note 50).

Defined Benefit Plans:The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. Anactuarial valuation involves making various assumptions that may differ from actual developments in the future. These include thedetermination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

Use of estimates and judgments and Estimation uncertainty (Continued)

The ongoing COVID-19 pandemic has increased the estimation uncertainty in the preparation of these Financial Statements.

238


2


Rs. in lakhs


b)

c)

d)

e)

f)

2.8

The estimated useful lives used for computation of depreciation are as follows:

Depreciation on PPE is provided on straight-line basis in accordance with the useful lives specified in Schedule II to the Companies Act,2013 on a pro-rata basis.

Advances paid towards the acquisition of PPE outstanding at each balance sheet date are disclosed separately under Other non-financialassets. Capital work in progress comprises the cost of PPE that are not ready for its intended use at the reporting date.

Assets held for sale or disposals are stated at the lower of their net book value and net realisable value.

Fee and commission income :Fee based income are recognised when they become measurable and when it is probable to expect their ultimate collection. Commission and brokerage income earned for the services rendered are recognised as and when they are due.

Sale of services:Income from sale of services are recognised on rendering of such services.Brokerage Income, Handling Charges & Broker Retainer Fees is recognised for net of Goods and Service Tax (GST) amount onrendering of services. Brokerage income is recognized on receiving details of the policy issued by the insurance company or receipt ofbrokerage whichever is earlier. The revenue from rendering of consultancy services is recognised in proportion to the stage ofcompletion of the transaction at the reporting date.Investment Management Fees are recognised on an accrual basis and are billed to each mutual fund scheme in accordance with theterms of the Scheme Information Document of each Scheme managed by the Group. Portfolio Management Fees and Fees for AdvisoryServices is recognised on an accrual basis when the services are rendered and an enforceable right to receive the fees has arisen inaccordance with the terms of the agreement.Trustee fees are recognised as revenue when the trustee services are performed for the schemes of Mahindra Mutual Fund.Dividend and interest income on investments:- Dividends are recognised in Statement of profit and loss only when the right to receive payment is established, it is probable that theeconomic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.- Interest income from on investments is recognised when it is certain that the economic benefits will flow to the Group and the amountof income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at theeffective interest rate applicable.

PPE are stated at cost of acquisition (including incidental expenses), less accumulated depreciation and accumulated impairment loss, if any. Property, Plant and Equipments (PPE)

In accordance with Ind AS 116 - Leases, applicable effective from 1 April 2019, the Right-Of-Use assets (Freehold premises) are initiallyrecognized at cost which comprises of initial amount of lease liability adjusted for any lease payments made at or prior to thecommencement date of the lease plus any initial direct costs less any lease incentives. These are subsequently measured at cost lessaccumulated depreciation and impairment losses, if any. Right-Of-Use assets (Freehold premises) are depreciated from the commencementdate on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

Revenue recognition :

Subvention incomeSubvention income received from manufacturers / dealers at the inception of the loan contracts which is directly attributable toindividual loan contracts in respect of vehicles financed is recognised in Statement of profit and loss using the effective interest methodover the tenor of such loan for all financial instruments measured at amortised cost. In cases where the subvention income is determinedbased on achievement of certain volume or business target and right to receive such subvention is established, it is recognized fully inthe Statement of profit and loss using straight line method over the tenor of such loan contracts.

Rental Income Income from operating leases is recognised in the Statement of profit and loss on a straight-line basis over the lease term. In certainlease arrangements, variable rental charges are also recognised over and above minimum commitment charges based on usage patternand make/model of the asset.

239


2


Rs. in lakhs


2.9 a) Intangible assets :

b) Intangible assets under development :

2.10a)

b)

2.11a)

Assets costing less than Rs.5000/- are fully depreciated in the period of purchase.

Property, Plant and Equipments (PPE) (Continued) Buildings ……………………………………………… 60 years Computers and Data processing units ………………… 3 to 6 years Furniture and fixtures …………………………………. 10 years Office equipments …………………………………….. 5 years Vehicles ……………………………………………….. 4 years to 10 years Vehicles under lease .................................................. 8 years Right-Of-Use assets (Leasehold premises) ....................2 to 10 years

Financial instruments :

PPE is derecognised on disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition ofthe asset (calculated as the difference between the net disposal proceeds and the net carrying amount of the asset) is recognised in otherincome / netted off from any loss on disposal in the Statement of profit and loss in the year the asset is derecognised.

Intangible assets are stated at cost less accumulated amortization and accumulated impairment loss, if any.Intangible assets comprises of computer software which is amortized over the estimated useful life. The amortization period is lower oflicense period or 36 months which is based on management’s estimates of useful life. Amortisation is calculated using the straight linemethod to write down the cost of intangible assets over their estimated useful lives.

Foreign exchange transactions and translations :Initial recognitionTransactions in foreign currencies are recognised at the prevailing exchange rates between the reporting currency and a foreign currencyon the transaction date.

ConversionTransactions in foreign currencies are translated into the functional currency using the exchange rates at the dates of the transactions.Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets andliabilities denominated in foreign currencies at year end exchange rates are generally recognised in Statement of profit and loss. Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of profit and loss, withinfinance costs. All other foreign exchange gains and losses are presented in the Statement of profit and loss on a net basis.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when thefair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gainor loss. Thus, translation differences on non- monetary assets and liabilities such as equity instruments held at fair value through profitor loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such asequity investments classified as FVOCI are recognised in other comprehensive income. Non-monetary items that are measured at historical cost in foreign currency are not retranslated at reporting date.

Recognition and initial measurement - Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to theacquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added toor deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costsdirectly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in Statement ofprofit and loss.

The Group, initially recognizes intangible asset under development at cost during the development phase based on the management's judgement that technological and economic feasibility is confirmed. Upon completion of the development phase, the amount is capitalized as intangible asset.

240


2


Rs. in lakhs


b)

The Group's business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios being thelevel at which they are managed. The financial asset is held with the objective to hold financial asset in order to collect contractual cashflows as per the contractual terms that give rise on specified dates to cash flows that are solely payment of principal and interest (SPPI)on the principal amount outstanding. Accordingly, the Group measures Bank balances, Loans, Trade receivables and other financialinstruments at amortised cost.

FVOCI - debt instruments -The Group measures its debt instruments at FVOCI when the instrument is held within a business model, the objective of which isachieved by both collecting contractual cash flows and selling financial assets; and the contractual terms of the financial asset meet theSPPI test.FVOCI - equity instruments -The Group subsequently measures all equity investments at fair value through profit or loss, unless the management has elected toclassify irrevocably some of its equity investments as equity instruments at FVOCI, when such instruments meet the definition of Equityunder Ind AS 32 Financial Instruments and are not held for trading.Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Group changes its businessmodel for managing financial assets.All financial asset not classified as measured at amortised cost or FVOCI are measured at FVTPL. This includes all derivative financialassets.

Financial assets: Subsequent measurement and gains and losses - Financial assets at amortised cost are subsequently measured at amortised cost using effective interest method. The amortised cost isreduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in Statement of profitand loss. Any gain and loss on derecognition is recognised in Statement of profit and loss.Debt investment at FVOCI are subsequently measured at fair value. Interest income under effective interest method, foreign exchangegains and losses and impairment are recognised in Statement of profit and loss. Other net gains and losses are recognised in OCI. Onderecognition, gains and losses accumulated in OCI are reclassified to Statement of profit and loss.For equity investments, the Group makes an election on an instrument-by-instrument basis to designate equity investments as measuredat FVOCI. These elected investments are measured at fair value with gains and losses arising from changes in fair value recognised inother comprehensive income and accumulated in the reserves. The cumulative gain or loss is not reclassified to Statement of profit andloss on disposal of the investments. These investments in equity are not held for trading. Instead, they are held for strategic purpose.Dividend income received on such equity investments are recognised in Statement of profit and loss. Equity investments that are not designated as measured at FVOCI are designated as measured at FVTPL and subsequent changes in fairvalue are recognised in Statement of profit and loss.Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, arerecognised in Statement of profit and loss.

Financial instruments :(Continued)Classification and subsequent measurement - - Financial assets On initial recognition, a financial asset is classified as measured at - Amortised cost; - FVOCI - debt instruments; - FVOCI - equity instruments; - FVTPL

Amortised cost -

241


2


Rs. in lakhs


c)

d)

e)

Financial liabilities

f)

Financial liabilities and equity instruments: Financial instruments :(Continued)

Classification as debt or equity - Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substanceof the contractual arrangements and the definitions of a financial liability and an equity instrument.Equity instruments - An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equityinstruments issued by Group are recognised at the proceeds received. Transaction costs of an equity transaction are recognised as adeduction from equity.Financial liabilities - Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it isclassified as held-for-trading or it is a derivative or it is designated as such on initial recognition. Other financial liabilities aresubsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses arerecognised in Statement of profit and loss. Any gain or loss on derecognition is also recognised in Statement of profit and loss.

Financial guarantee contracts:A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss itincurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.Financial guarantee contracts issued by the Group are initially measured at their fair values and, if not designated as at FVTPL, aresubsequently measured at the higher of: - the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 - Financial Instruments; and- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles

of Ind AS 115 - Revenue from Contracts with Customers.

DerecognitionFinancial assetsThe Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers therights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of thefinancial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownershipand does not retain control of the financial asset.If the Group enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially allof the risks and rewards of the transferred assets, the transferred assets are not derecognised.

A financial liability is derecognised when the obligation in respect of the liability is discharged, cancelled or expires. The differencebetween the carrying value of the financial liability and the consideration paid is recognised in Statement of profit and loss.

OffsettingFinancial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Groupcurrently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset andsettle the liability simultaneously.

242


2


Rs. in lakhs


g)

h) Impairment of financial instruments

i) Collateral repossessed -

Financial instruments :(Continued)Derivative financial instrumentsThe Group enters into derivative financial instruments, primarily foreign exchange forward contracts, currency swaps and interest rateswaps, to manage its borrowing exposure to foreign exchange and interest rate risks.Derivatives embedded in non-derivative host contracts are treated as separate derivatives when their risks and characteristics are notclosely related to those of the host contracts and the host contracts are not measured at FVTPL.Derivatives are initially recognised at fair value at the date the contracts are entered into and are subsequently remeasured to their fairvalue at the end of each reporting period. The resulting gain/loss is recognised in Statement of profit and loss.

Equity instruments are not subject to impairment under Ind AS 109.The Group recognises lifetime expected credit losses (ECL) when there has been a significant increase in credit risk since initialrecognition and when the financial instrument is credit impaired. If the credit risk on the financial instrument has not increasedsignificantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12month ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of adefault occurring since initial recognition. 12 month ECL represents the portion of lifetime ECL that is expected to result from defaultevents on a financial instrument that are possible within 12 months after the reporting date.When determining whether credit risk of a financial asset has increased significantly since initial recognition and when estimatingexpected credit losses, the Group considers reasonable and supportable information that is relevant and available without undue cost oreffort. This includes both quantitative and qualitative information and analysis, including on historical experience and forward-lookinginformation (refer note 50).Management overlay is used to adjust the ECL allowance in circumstances where management judges that the existing inputs,assumptions and model techniques do not capture all the risk factors relevant to the Group's lending portfolios. Emerging local or globalmacroeconomic, micro economic or political events, and natural disasters that are not incorporated into the current parameters, riskratings, or forward looking information are examples of such circumstances. The use of management overlay may impact the amount ofECL recognized.The Group recognises lifetime ECL for trade, lease and other receivables. The expected credit losses on these financial assets areestimated using a provision matrix based on the respective businesses of the Group’s historical credit loss experience, adjusted forfactors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecastdirection of conditions at the reporting date, including time value of money where appropriate. Lifetime ECL represents the expectedcredit losses that will result from all possible default events over the expected life of a financial instrument.Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debtsecurities at FVOCI, the loss allowance is recognised in OCI and carrying amount of the financial asset is not reduced in the balancesheet.

Based on operational requirements, the Group’s policy is to determine whether a repossessed asset can be best used for its internaloperations or should be sold. Assets determined to be useful for the internal operations are transferred to their relevant asset category forcapitalisation at their fair market value.In the normal course of business, the Group does not physically repossess assets/properties or other assets in its retail portfolio, butengages external agents to recover funds, generally by selling at auction, to settle outstanding debt. Any surplus funds are returned to thecustomers/ obligors. As a result of this practice, the assets / properties under legal repossession processes are not recorded on thebalance sheet.

243


2


Rs. in lakhs


j) Write offs -

2.12a)

b)

c)

d)

e)

f)

The gross carrying amount of a financial asset is written off when there is no realistic prospect of further recovery. This is generally thecase when the Group determines that the debtor/borrower does not have assets or sources of income that could generate sufficient cashflows to repay the amounts subject to the write- off. However, financial assets that are written off could still be subject to enforcementactivities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made from writtenoff assets are netted off against the amount of financial assets written off during the year under "Bad debts and write offs" forming partof "Impairment on financial instruments" in Statement of profit and loss.

Short-term employee benefitsShort-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to bepaid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employeeand the obligation can be estimated reliably.

Contribution to provident fund and ESIC and National Pension Scheme -Group's contribution paid/payable during the year to provident fund, ESIC and National Pension Scheme is recognised in the Statementof profit and loss.

Gratuity - The Group's liability towards gratuity schemes is determined by independent actuaries, using the projected unit credit method. Thepresent value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to marketyields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. Pastservices are recognised at the earlier of the plan amendment / curtailment and recognition of related restructuring costs/terminationbenefits.The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value ofplan assets. This cost is included in employee benefit expense in the Statement of profit and loss.Remeasurement gains/losses - Remeasurement of defined benefit plans, comprising of actuarial gains / losses, return on plan assets excluding interest income arerecognised immediately in the balance sheet with corresponding debit or credit to Other Comprehensive Income (OCI).Remeasurements are not reclassified to Statement of profit and loss in the subsequent period.Remeasurement gains or losses on long-term compensated absences that are classified as other long-term benefits are recognised inStatement of profit and loss.

Superannuation fund - The Group makes contribution to the Superannuation scheme, a defined contribution scheme, administered by Life InsuranceCorporation of India, which are charged to the Statement of profit and loss. The Group has no obligation to the scheme beyond itscontributions.

Employee benefits:

Leave encashment / compensated absences / sick leave -The Group provides for the encashment / availment of leave with pay subject to certain rules. The employees are entitled to accumulateleave subject to certain limits for future encashment / availment. The liability is provided based on the number of days of unutilizedleave at each balance sheet date on the basis of an independent actuarial valuation.

Employee stock options :Equity-settled share-based payments to employees are recognised as an expense at the fair value of equity stock option at the grant date.The fair value determined at the grant date of the Equity-settled share-based payments is expensed on a straight-line basis over thevesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity.

Financial instruments :(Continued)

244


2


Rs. in lakhs


2.14

a)

b)

2.15Expenses incurred in connection with fresh issue of Share capital are adjusted against Securities premium reserve.

2.16

Deferred tax :Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying valuesof assets and liabilities and their respective tax bases. Deferred tax liabilities and assets are measured at the tax rates that are expectedto apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted orsubstantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the taxconsequence that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle thecarrying amount of its assets and liabilities.Deferred tax assets are recognized to the extant that it is probable that future taxable income will be available against which thedeductible temporary difference could be utilized. Such deferred tax assets and liabilities are not recognised if the temporary differencearises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extant that it is no longerprobable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Finance costs include interest expense computed by applying the effective interest rate on respective financial instruments measured atAmortised cost - bank term loans, non-convertible debentures, fixed deposits mobilised, commercial papers, subordinated debts andexchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Financecosts are charged to the Statement of profit and loss.

Finance costs :

Taxation - Current and deferred tax:

Effective from 1 April 2019, on application of Ind AS 116 (Leases), interest expense on lease liabilities computed by applying the Group's weighted average incremental borrowing rate has been included under finance costs.

Income tax expense comprises of current tax and deferred tax. It is recognised in Statement of profit and loss except to the extent that itrelates to an item recognised directly in equity or in other comprehensive income.

Current tax :Current tax comprises amount of tax payable in respect of the taxable income or loss for the year determined in accordance with IncomeTax Act, 1961 and any adjustment to the tax payable or receivable in respect of previous years. The Group’s current tax is calculatedusing tax rates that have been enacted or substantively enacted by the end of the reporting period. Significant judgments are involved indetermining the provision for income taxes including judgment on whether tax positions are probable of being sustained in taxassessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods.

Securities issue expenses :

Impairment of assets other than financial assets :The Group reviews the carrying amounts of its tangible (PPE , including assets given on operating lease) and intangible assets at the end ofeach reporting period, to determine whether there is any indication that those assets have impaired. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount isdetermined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets orgroup of assets.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flowsare discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and therisks specific to the asset for which the estimates of future cash flows have not been adjusted.If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of theasset (or cash-generating unit) is reduced to its recoverable amount.When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revisedestimate of its recoverable amount such that the increased carrying amount does not exceed the carrying amount that would have beendetermined if no impairment loss had been recognised for the asset (or cash-generating unit) in prior years. The reversal of an impairmentloss is recognised in Statement of profit and loss.

245


2


Rs. in lakhs


2.18 Gross obligation value of written put options to Non-controlling Interest (NCI) :

2.19 Leases :

For the written put options held by the Group for acquiring remaining interest in its subsidiary, gross obligation is recognised by debit toOther Equity for the expected amount payable in case of exercise of the put by the NCI.

The lease liability is initially measured at amortized cost at the present value of the future lease payments that are not paid at the commencement date, discounted using the Group's incremental average borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Group changes its assessment if whether it will exercise an extension or a termination option.ROU assets and Lease liabilities have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

Where the Group is the lessee - As a lessee, the Group’s lease asset class primarily consist of buildings or part thereof taken on lease for office premises and certain ITequipments used for operating activities. The Group assesses whether a contract contains a lease, at inception of a contract. A contract is, orcontains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether: (i) the contract involvesthe use of an identified asset (ii) the Group has substantially all of the economic benefits from use of the asset through the period of the leaseand (iii) the Group has the right to direct the use of the asset.At the date of commencement of the lease, the Group recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for alllease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases.For these short-term and low value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over theterm of the lease.Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and leaseliabilities includes these options when it is reasonably certain hat they will be exercised.The right-of-use assets are initially recognized at cost which comprises of initial amount of lease liability adjusted for any lease paymentsmade at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. These are subsequentlymeasured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencementdate on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

Provisions :Provisions are recognised when there is a present obligation as a result of a past event, and it is probable that an outflow of resourcesembodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of thereporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to theliability. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provisionor disclosure is made.

Where the Group is the lessor -At the inception of the lease, the Group classifies each of its leases as either a finance lease or an operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.The Group has given certain vehicles on lease where it has substantially retained the risks and rewards of ownership and hence these are classified as operating leases. These assets given on operating lease are included in PPE. Lease income is recognised in the Statement of profit and loss as per contractual rental unless another systematic basis is more representative of the time pattern in which the benefit derived from the leased asset is diminished. Costs including depreciation are recognized as an expense in the Statement of profit and loss. Initial direct costs are recognised immediately in Statement of profit and loss.

246


2


Rs. in lakhs

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)2.19 Leases : (Continued)

2.20 Cash and cash equivalents:

2.21 Earnings Per Share :

2.22 Standards issued but not yet effective :Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards. There is no such notification whichwould have been applicable from 1 April, 2020.

Cash and cash equivalents in the balance sheet comprise cash on hand, cheques and drafts on hand, balance with banks in current accountsand short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value.

Transition to Ind AS 116Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (IndianAccounting Standards) Second Amendment Rules, has notified Ind AS 116, Leases, which replaces the existing lease standard, Ind AS 17leases, and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leasesfor both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.The Group has adopted Ind AS 116, Leases, effective 1 April 2019 using modified retrospective approach of transition without restating thefigures for prior periods. Consequently, the Group recorded the lease liability at the present value of the lease payments discounted at theincremental borrowing rate and the right of use asset at its carrying amount as if the standard had been applied since the commencement dateof the lease, but discounted at the Group’s incremental borrowing rate at the date of initial application. Comparatives as at and for the yearended March 31,2019 have not been retrospectively adjusted and therefore will continue to be reported under the accounting policiesincluded as part of our Annual Report for year ended March 31, 2019.

On application of Ind AS 116, financial information is presented in the following manner for the year ended 31 March 2020.a) ROU assets and lease liabilities have been included within the line items "Property, plant and equipment" and "Other financial liabilities"respectively in the Balance sheet;b) Interest expenses on the lease liability and depreciation charge for the right-to-use asset have been included within the line items "Financecosts" and "Depreciation, amortization and impairment" respectively in the statement of profit or loss;c) Short-term lease payments and payments for leases of low-value assets, where exemption as permitted under this standard is availed, havebeen recognized as expense on a straight line basis over the lease term in the statement of profit or loss.d) Cash payments for the principal of the lease liability have been presented within "financing activities" in the statement of cash flows;Further, on application of Ind AS 116, the nature of expense in the Statement of profit or loss has changed from lease rent in previousperiods to depreciation cost for the ROU asset and finance cost for interest accrued on lease liability in the current financial year.The effect of transition to Ind AS 116 and other disclosures are set out under note no.41.

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weightedaverage number of equity shares outstanding during the period. Earnings considered in ascertaining the Group’s earnings per share is the netprofit for the period after deducting preference dividends and any attributable tax thereto for the period. The weighted average number ofequity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, sub-division of sharesetc. that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculatingdiluted earnings per share, the net profit or loss for the period attributable to equity shareholders is divided by the weighted average numberof equity shares outstanding during the period, considered for deriving basic earnings per share and weighted average number of equityshares that could have been issued upon conversion of all dilutive potential equity shares.

247

Notes to Consolidated Financial Statements (Continued)as at 31 March 2020Rs. in lakhs

3 Cash and cash equivalentsRs. in lakhs

31 March 2020 31 March 2019 Cash on hand 1,627.41 4,366.26 Cheques and drafts on hand 300.91 1,601.77 Balances with banks in current accounts 56,331.91 47,754.29 Term deposits with original maturity up to 3 months 20,000.00 -

78,260.23 53,722.32

4 Bank balances other than cash and cash equivalentsRs. in lakhs

31 March 2020 31 March 2019 Earmarked balances with banks -- Unclaimed dividend accounts 68.66 89.78 Term deposits with maturity less than 12 months - - Free 4,575.00 15,001.00 - Under lien # 70,255.78 30,590.65

74,899.44 45,681.43

# Details of Term depositsRs. in lakhs

Bank balances other than cash

and cash equivalents

(Note 4)


(Note 9)Total Bank balances

other than cash and cash

equivalents(Note 4)


(Note 9)Total

22,501.00 20,000.00 42,501.00 5,517.23 7,500.00 13,017.23 46,208.47 4,330.00 50,538.47 24,538.61 - 24,538.61

21.31 60.25 81.56 9.81 71.50 81.31 1,500.00 - 1,500.00 500.00 - 500.00

25.00 100.00 125.00 25.00 - 25.00

Total 70,255.78 24,490.25 94,746.03 30,590.65 7,571.50 38,162.15

5 Derivative financial instruments

Notional amounts


Notional amounts


i) Currency derivatives : Forward contracts 58,205.49 2,323.02 59,659.22 917.97 Options 2,05,079.75 6,969.74 - 88.42

Total derivative financial instruments 2,63,285.24 9,292.76 59,659.22 1,006.39

Particulars

For Statutory Liquidity Ratio For securitization transactions

For towards Constituent Subsidiary General Ledger (CSGL) account

Legal deposits


31 March 2020 31 March 2019


Collateral deposits with banks for Aadhaar authentication

248

Notes to Consolidated Financial Statements (Continued)as at 31 March 2020Rs. in lakhs


6 Receivables31 March 2020 31 March 2019

a) Trade receivablesi) Secured, considered good

- Lease rental receivable on operating lease transactions 64.64 18.85 Less : Impairment loss allowance (1.48) -

63.16 18.85 ii) Unsecured, considered good :

- Subvention and other income receivables 5,227.90 5,341.46 iii) Credit impaired : -

373.39 373.39 - Subvention and other income receivables 241.95 109.75

615.34 483.14 Less : Impairment loss allowance (615.34) (483.14)

- - 5,291.06 5,360.31

7 Loans 31 March 2020 31 March 2019

A) Loans (at amortised cost) :Retail loans 64,43,978.16 58,74,147.34 Small and Medium Enterprise (SME) financing 1,86,440.83 1,88,053.12 Loans under housing finance business 8,44,389.35 8,04,874.76 Bills of exchange 53,166.01 61,534.86 Trade Advances 1,23,934.89 1,87,430.56 Inter corporate deposits to related parties 100.00 100.00 Other loans and advances 23.42 12.27

Total (Gross) 76,52,032.66 71,16,152.91 Less : Impairment loss allowance (3,65,654.21) (2,22,252.94) Total (Net) 72,86,378.45 68,93,899.97

B) i) Secured by tangible assets 73,74,911.86 67,86,072.79 ii) Secured by intangible assets - - iii) Covered by bank / Government guarantees - - iv) Unsecured 2,77,120.80 3,30,080.12 Total (Gross) 76,52,032.66 71,16,152.91 Less : Impairment loss allowance (3,65,654.21) (2,22,252.94) Total (Net) 72,86,378.45 68,93,899.97

C) i) Loans in Indiaa) Public Sector - - b) Others 76,52,032.66 71,16,152.91

Total (Gross) 76,52,032.66 71,16,152.91 Less : Impairment loss allowance (3,65,654.21) (2,22,252.94) Total (Net) - C (i) 72,86,378.45 68,93,899.97

ii) Loans outside India - - Less : Impairment loss allowance - - Total (Net) - C (ii) - -

Total (Net) - C (i+ii) 72,86,378.45 68,93,899.97 Note: There is no loan asset measured at FVOCI or FVTPL or designated at FVTPL.

There is no due by directors or other officers of the company or any firm or private company in which any director is a partner, a director or amember.

- Trade receivable on hire purchase transactions

249

Notes to Consolidated Financial Statements (Continued)as at 31 March 2020

8 Investments

Investments Amortisedcost

Others(at cost)

Total Amortisedcost

Others(at cost)

TotalThrough

OCIThrough

profit or lossSub-total Through

OCIThrough

profit or lossSub-total

Units of mutual funds - 3,39,750.56 3,39,750.56 - 3,39,750.56 - - 63,412.45 63,412.45 - 63,412.45 Government securities 98,049.30 14,301.61 - 14,301.61 1,12,350.91 70,922.15 70,922.15 Debt securities - -

2,500.00 - - - - 2,500.00 6,200.00 - - - - 6,200.00 12,409.65 - - - - 12,409.65 21,359.96 - - - - 21,359.96

iii) Commercial Papers - - - - - 21,994.94 - 59,070.39 59,070.39 - 81,065.33 iv) Certificate of deposits with banks - - - - - - - 46,910.08 46,910.08 - 46,910.08

- 10,474.76 - 10,474.76 - 10,474.76 - - - - -

- - - - - - - 1,088.52 1,088.52 - 1,088.52

Equity instruments of associate - - - - - 49,371.81 49,371.81 - - - - 40,894.08 40,894.08

Equity instruments of joint venture - - - - - 4,411.85 4,411.85 - - - - - -

Equity instruments of other entities - - 1,361.32 - 1,361.32 - 1,361.32 - 1,154.65 - 1,154.65 - 1,154.65

- 311.98 - 311.98 - 311.98 - - - - - -

- 1,218.53 - 1,218.53 - 1,218.53 - - - - - -

- - - - 1.00 1.00 - - 1.00 1.00 - 9.60 - 9.60 - 9.60 - 9.60 - 9.60 - 9.60

Total - Gross (A) 1,12,958.95 27,677.80 3,39,750.56 3,67,428.36 53,784.66 5,34,171.97 1,20,477.05 1,164.25 1,70,481.44 1,71,645.69 40,895.08 3,33,017.82 i) Investments outside India - - - - 53,783.66 53,783.66 - - - - 40,894.08 40,894.08 ii) Investments in India 1,12,958.95 27,677.80 3,39,750.56 3,67,428.36 1.00 8,47,816.67 1,20,477.05 1,164.25 1,70,481.44 1,71,645.69 1.00 4,63,769.43

Total - Gross (B) 1,12,958.95 27,677.80 3,39,750.56 3,67,428.36 53,784.66 5,34,171.97 1,20,477.05 1,164.25 1,70,481.44 1,71,645.69 40,895.08 3,33,017.82 Less : Allowance for Impairment loss ( C ) 136.19 - - - - 136.19 282.52 - - - - 282.52 Total - Net D (A-C) 1,12,822.76 27,677.80 3,39,750.56 3,67,428.36 53,784.66 5,34,035.78 1,20,194.53 1,164.25 1,70,481.44 1,71,645.69 40,895.08 3,32,735.30

i) 'Equity investment in Smartshift Logistics Solutions Private Limited (formerly known as Orizonte Business Solutions Limited which was later acquired by Resfeber Labs Private Limited)ii) Compulsorily Convertible Cumulative Participating Preference Shares (CCCPS) in Smartshift Logistics Solutions Private Limited (formerly known as Orizonte Business Solutions Limited which was later acquired by Resfeber Labs Private Limited)iii) 'Equity investment in AAPCA Demystifying Data Technology Private Limited (Optionally Convertible Debentures converted in to equity shares on exercise of conversion option after meeting applicable terms and conditions)iv) 'New Democratic Electoral Trustv) 'Equity investment in MF Utilities Limited




Rs. in lakhs

49% Ownership in Mahindra Finance USA, LLC(Joint venture entity with De Lage Landen Financial Services INC. in United States of America)

38.20% Ownership in Ideal Finance Limited, Sri Lanka(Joint venture entity with Ideal Finance Limited in Sri Lanka)

i) Secured redeemable non-convertible debenturesii) Investments in Pass Through Certificates under securitization transactions

v) Investment in Bonds of Food Corporation of India and NCDs of NABARDvi) Optionally Convertible Debentures of AAPCA Demystifying Data Technology Private Limited

250


9 Other financial assets 31 March 2020 31 March 2019

Interest accrued on investments 2,393.28 1,564.09 Interest accrued on other deposits 4,615.09 946.97 Security Deposits 3,791.88 3,487.02 Term deposits with banks (remaining maturity more than 12 months) - Free 15,444.49 3,281.49 - Under lien 24,490.25 7,571.50 Others 1,243.72 4,356.01

51,978.71 21,207.08

10 Deferred tax assets (net) and Tax expense(i) Deferred tax assets (net)

Rs. in lakhs Balance as at1 April 2018

Charge/ (credit) to profit and

loss

Charge/ (credit) to

equity Charge/

(credit) to OCI

Balance as at

31 March 2019

Charge/ (credit) to profit and

loss

Charge/ (credit) to

equity Charge/

(credit) to OCI Balance as at

31 March 2020

Tax effect of items constituting deferred tax liabilities : - Share based payments (703.06) (470.85) - - (1,173.91) 11.70 - - (1,162.21) - Application of EIR on financial assets & liabilities (3,903.52) (4,058.68) - - (7,962.20) 3,226.79 - - (4,735.41) - FVTPL financial asset (9.37) (238.98) - - (248.35) (589.21) - - (837.56) - Others (959.09) (580.61) (749.03) - (2,288.73) (3,626.92) - - (5,915.65)

(5,575.04) (5,349.12) (749.03) - (11,673.19) (977.64) - - (12,650.83) Tax effect of items constituting deferred tax assets : - Provision for employee benefits 2,430.87 129.74 - 512.84 3,073.45 570.15 - 63.76 3,707.36 - Derivatives 2,130.60 1,909.02 - - 4,039.62 2,385.86 - - 6,425.48 - Depreciation on fixed assets 190.73 108.52 - - 299.25 (1.98) - - 297.27 - Application of EIR on financial liabilities 292.37 292.37 (81.79) - - 210.58 - Allowance for ECL 65,664.40 (24,462.72) - - 41,201.68 14,672.21 - - 55,873.89 - Others 6,717.84 1,453.14 - (434.41) 7,736.57 (3,577.76) - (139.14) 4,019.67

77,426.81 (20,862.30) - 78.43 56,642.94 13,966.69 - (75.38) 70,534.25 Net deferred tax assets 71,851.77 (26,211.43) 749.03 78.43 44,969.75 12,989.05 - (75.38) 57,883.42

(ii) Income tax recognized in Statement of profit and loss Rs. in lakhs

31 March 2020 31 March 2019

Current tax:In respect of current year 64,730.05 70,650.28 In respect of prior years (119.80) 486.26

64,610.25 71,136.54

Deferred tax:In respect of current year origination and reversal of temporary differences (25,152.61) 26,211.43 In respect of rate change (Re-measurement of opening deferred tax assets due to income tax rate change) # 12,163.56 -

(12,989.05) 26,211.43 Total Income tax recognised in Statement of profit and loss 51,621.20 97,347.97

(iii) Income tax recognized in Other Comprehensive IncomeRs. in lakhs

31 March 2020 31 March 2019

Income tax related to items recognised in Other Comprehensive Income during the year :

Net fair value gains on investments in debt instruments at FVTPLRemeasurement of defined employee benefits 63.76 512.84 Net gain / (loss) on equity instruments through OCI (23.17) (158.87) Net gain / (loss) on debt instruments through OCI (115.97) (275.54)

Total Income tax recognised in Other Comprehensive Income (75.38) 78.43


Rs. in lakhs

251



Rs. in lakhs10 Deferred tax assets (net) (Continued)(iv) Reconciliation of estimated Income tax expense at tax rate to income tax expense reported in the Statement of profit and loss is as follows:

Rs. in lakhs As at

31 March 2020 As at

31 March 2019

Profit before tax 1,55,613.24 2,79,383.28 Applicable income tax rate 25.168% 34.944%Expected income tax expense 39,164.74 97,627.69

Tax effect of adjustments to reconcile expected Income tax expense at tax rate to reported income tax expense:Effect of income exempt from tax (1,439.60) (1,233.25) Effect of expenses / provisions not deductible in determining taxable profit 369.27 (843.59) Effect of tax incentives and concessions 61.71 251.54 Effect of differential tax rate (Re-measurement of opening deferred tax assets due to income tax rate change) # 12,163.56 - Adjustment related to tax of prior years (119.80) 486.26 Tax not recognised 1,807.06 1,380.24 Others (385.74) (320.92)

Reported income tax expense 51,621.20 97,347.97

# The Taxation Laws (Amendment) Ordinance, 2019 contain substantial amendments in the Income Tax Act 1961 and the Finance (No.2) Act, 2019 which provides for an option to domesticcompanies to pay income tax at a concessional rate. The Group has elected to apply the concessional tax rate. Accordingly, the respective businesses of the Group has recognised the provision for income tax and re-measured the net deferred tax assets at concessional rate for the year ended 31 March 2020. Further, the opening net deferred tax asset has been re-measured at lower rate witha one-time impact of Rs.12,163.56 lakhs recognised as transition adjustment in the Statement of profit and loss for the year ended 31 March 2020.

252


11 Property, plant and equipmentsRs. in lakhs

Particulars Land Buildings # Building - Leasehold

Computers and Data processing

unitsFurniture and

fixturesOffice

equipmentsVehicles Vehicles under

lease Plant &

Machinery under lease

Right-Of-Use Assets

(Leasehold premises )

(b)

Total

GROSS CARRYING AMOUNTBalance as at 1 April 2018 81.40 132.04 10,087.09 8,812.76 10,072.40 8,084.63 13.75 - 37,284.07 Additions during the year 177.81 2,596.37 1,293.37 1,705.21 2,307.36 1,216.43 - 9,296.55 Disposals / deductions during the year 196.68 134.02 373.40 971.52 - 1,675.62 Balance as at 31 March 2019 81.40 132.04 177.81 12,486.78 9,972.11 11,404.21 9,420.47 1,230.18 - - 44,905.00 Balance as at 1 April 2019 81.40 132.04 177.81 12,486.78 9,972.11 11,404.21 9,420.47 1,230.18 - 25,183.63 70,088.63 Additions during the year 36.61 775.09 777.46 939.25 2,546.45 4,054.47 19.06 4,533.27 13,681.66 Disposals / deductions during the year 477.97 200.41 561.54 991.08 - 2,231.00 Balance as at 31 March 2020 81.40 132.04 214.42 12,783.90 10,549.16 11,781.92 10,975.84 5,284.65 19.06 29,716.90 81,539.29 ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES Balance as at 1 April 2018 - 25.78 - 6,616.18 5,421.19 6,845.81 4,634.77 0.74 - 23,544.47 Additions during the year - 2.22 10.05 1,968.43 1,062.60 1,514.67 1,461.64 44.79 - 6,064.40 Disposals / deductions during the year - - 194.64 114.32 363.63 849.82 - - 1,522.41 Balance as at 31 March 2019 - 28.00 10.05 8,389.97 6,369.47 7,996.85 5,246.59 45.53 - - 28,086.46 Balance as at 1 April 2019 - 28.00 10.05 8,389.97 6,369.47 7,996.85 5,246.59 45.53 - 28,086.46 Additions during the year - 2.22 25.15 1,958.80 1,018.00 1,470.22 1,838.87 438.83 1.39 6,015.18 12,768.66 Disposals / deductions during the year - - 477.17 186.09 553.61 874.53 - - 2,091.40 Balance as at 31 March 2020 - 30.22 35.20 9,871.60 7,201.38 8,913.46 6,210.93 484.36 1.39 6,015.18 38,763.72 NET CARRYING AMOUNTAs at 31 March 2019 81.40 104.04 167.76 4,096.81 3,602.64 3,407.36 4,173.88 1,184.65 - - 16,818.54 As at 31 March 2020 81.40 101.82 179.22 2,912.30 3,347.78 2,868.46 4,764.91 4,800.29 17.67 23,701.72 42,775.57

#REF! # Secured Non-convertible debentures (NCDs) have an exclusive pari-passu charges on Buildings.


Rs. in lakhs

253



Rs. in lakhs12 Intangible assets

Rs. in lakhsParticulars Computer

Software

GROSS CARRYING AMOUNTBalance as at 1 April 2018 3,998.08 Additions during the year 3,889.43 Deductions during the year - Balance as at 31 March 2019 7,887.51 Balance as at 1 April 2019 7,887.51 Additions during the year 1,375.71 Deductions during the year 45.31 Balance as at 31 March 2020 9,217.91

ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES Balance as at 1 April 2018 3,072.15 Additions during the year 1,488.92 Deductions during the year - Balance as at 31 March 2019 4,561.07 Balance as at 1 April 2019 4,561.07 Additions during the year 1,918.72 Deductions during the year 22.14 Balance as at 31 March 2020 6,457.65

NET CARRYING AMOUNTAs at 31 March 2019 3,326.44 As at 31 March 2020 2,760.26

254


13 Other non-financial assetsRs. in lakhs

31 March 2020 31 March 2019

Capital advances 2,201.03 896.25 Prepaid expenses 4,397.82 3,188.81 Balances with Government Authorities 1,221.09 1,224.00 Unamortised placement and arrangement fees paid on borrowing instruments 302.36 401.48 Insurance advances 290.94 185.59 Others 1,450.21 1,681.03

9,863.45 7,577.16


Notional amounts


Notional amounts


Currency derivatives : Forward contracts 20,013.63 2,559.18 20,231.96 2,176.30 Options - 1,456.88 1,23,078.50 5,526.23

Total derivative financial instruments 4,016.06 7,702.53

15 PayablesRs. in lakhs

31 March 2020 31 March 2019

I) Trade Payablesi) total outstanding dues of micro enterprises and small enterprises 25.61 23.72 ii) total outstanding dues of creditors other than micro enterprises and small enterprises 69,297.22 1,11,406.58

II) Other Payablesi) total outstanding dues of micro enterprises and small enterprises 17.40 253.29 ii) total outstanding dues of creditors other than micro enterprises and small enterprises 2,944.47 3,164.54

72,284.70 1,14,848.13

Micro, Small and Medium Enterprises:


a) Dues remaining unpaid to any supplier at the year end- Principal 42.50 27.42 - Interest on the above - -

b)

- Principal paid beyond the appointed date 49.47 - - Interest paid in terms of Section 16 of the MSMED Act 0.93 -

c) - -

d) Amount of interest accrued and remaining unpaid - - e) - -

92.90 27.42


31 March 2020 31 March 2019

Interest paid in terms of Section 16 of the MSMED Act along with the amount of payment made to the supplier beyond the appointed day during the year

Rs. in lakhs

Amount of interest due and payable for the period of delay on payments made beyond the appointed day during the year

Further interest due and payable even in the succeeding years, until such date when the interest due as above are actuallypaid to the small enterprises

Based on and to the extent of the information received by the Company from the suppliers during the year regarding their status under theMicro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the total outstanding dues of Micro and Small enterprises,which are outstanding for more than the stipulated period and other disclosures as per the Micro, Small and Medium EnterprisesDevelopment Act, 2006 (hereinafter referred to as “the MSMED Act”) are given below :

255



Rs. in lakhs16 Debt Securities


At Amortised costNon-convertible debentures (Secured) 18,99,694.63 21,50,047.33 Non-convertible debentures (Unsecured) 39,800.02 19,893.55 Commercial Papers (Unsecured) - 3,01,647.62 Rupee Denominated Secured Bonds overseas (Masala Bonds) 34,966.42 - Total (A+B) 19,74,461.07 24,71,588.50 Debt securities in India 19,39,494.65 24,71,588.50 Debt securities outside India 34,966.42 - Total 19,74,461.07 24,71,588.50

From the Balance Sheet dateInterest Rate

RangeAmount Interest Rate

RangeAmount

A) Issued on private placement basis (wholesale) - Repayable on maturity :Maturing within 1 year 7.10%-9.40% 7,03,050.00 7.29%-9.45% 7,66,000.00 Maturing between 1 year to 3 years 7.00%-9.75% 4,55,980.00 7.35% - 9.75 % 8,85,300.00 Maturing between 3 years to 5 years 7.45%-9.25% 2,26,800.00 7.82% - 9.25% 1,44,500.00 Maturing beyond 5 years 7.75%-9.18% 3,38,760.00 8.30% - 9.18% 1,84,010.00 Sub-total at face value (A) 17,24,590.00 19,79,810.00

B) Issued on retail public issue - Repayable on maturity :Maturing between 1 year to 3 years 9.00%-9.05% 40,540.83 9.00%-9.15% 94,096.94 Maturing between 3 years to 5 years 9.10%-9.15% 53,556.11 Maturing beyond 5 years 9.20%-9.30% 86,915.30 9.20%-9.30% 86,915.30 Sub-total at face value (B) 1,81,012.24 1,81,012.24 Total at face value (A+B) 19,05,602.24 21,60,822.24 Less: Unamortised discounting charges 5,907.61 10,774.91 Total amortised cost 18,99,694.63 21,50,047.33



RangeAmount

Repayable on maturity :Maturing beyond 5 years 8.53% 40,000.00 8.53% 20,000.00 Total at face value 40,000.00 20,000.00 Less: Unamortised discounting charges 199.98 106.45 Total amortised cost 39,800.02 19,893.55

Details of Non-convertible debentures (Unsecured) - :


Note: There is no debt security measured at FVTPL or designated at FVTPL.The Secured Non-convertible debentures are secured by paripassu charges on office premises, PPE, book debts and exclusive charges onreceivables under loan contracts to the extend of 100% of outstanding secured debentures.Details of Non-convertible debentures (Secured) :


256



Rs. in lakhs16 Debt Securities (Continued)



RangeAmount

Repayable on maturity :Maturing within 1 year - - 7.70% - 9.05% 3,10,000.00 Total at face value - 3,10,000.00 Less: Unamortised discounting charges - 8,352.38 Total amortised cost - 3,01,647.62



RangeAmount

Repayable on maturity :Maturing between 3 years to 5 years 7.40% 35,000.00 - Total at face value 35,000.00 - Less: Unamortised discounting charges 33.58 - Total amortised cost 34,966.42 -

17 Borrowings (Other than Debt Securities)Rs. in lakhs

31 March 2020 31 March 2019

At Amortised costa) Term loans

i) Secured - - from banks 20,80,872.19 16,82,292.65 - from banks in foreign currency 18,294.06 63,403.97 - External Commercial Borrowings 2,73,778.83 1,37,396.77 - Associated liabilities in respect of securitisation transactions 8,88,170.82 4,34,734.49 - from other parties 22.70 3,180.20

ii) Unsecured - - from banks 26,400.00 5,813.54

b) Other loans and advances (other than related parties)Unsecured -

- Inter-corporate deposits (ICDs) 45,175.00 1,13,850.00 c) Loans repayable on demand

Secured - - Cash credit facilities with banks - 22,600.50

Total 33,32,713.60 24,63,272.12

Borrowings in India 30,58,934.77 23,25,875.35 Borrowings outside India 2,73,778.83 1,37,396.77 Total 33,32,713.60 24,63,272.12

The term loans are secured by exclusive charges on receivables under loan contracts and book debts to the extend of 100% of outstandingsecured loans.

Note: There is no Borrowing designated at FVTPL

The borrowings have not been guaranteed by directors or others. Also the Group has not defaulted in repayment of principal and interest.


Details of Commercial Papers (Unsecured):

Rupee Denominated Secured Bonds overseas (Masala Bonds)


257



Rs. in lakhs17 Borrowings (Other than Debt Securities) (Continued)

Details of term loans from banks (Secured) From the Balance Sheet date

Interest Rate range

Amount Interest Rate range

Amount1) Repayable on maturity :Maturing within 1 year 6.55%-9.75% 2,48,635.00 8.20% -9.50% 1,66,400.00 Maturing between 1 year to 3 years 6.95% -9.50% 2,62,500.00 8.20% - 9.50% 1,00,500.00 Maturing between 3 years to 5 years 7.90% -9.50% 25,000.00 Total for repayable on maturity 5,11,135.00 2,91,900.00 2) Repayable in installments :i) Monthly -Maturing between 1 year to 3 years 7.85% 10,000.00 8.91% 10,000.00

Sub-Total - 10,000.00 - 10,000.00 ii) Quarterly -Maturing within 1 year 5.45%-9.25% 1,72,923.61 8.35% - 8.85% 1,05,313.49 Maturing between 1 year to 3 years 5.45%-9.25% 3,02,711.31 8.35% - 8.85% 2,21,666.67 Maturing between 3 years to 5 years 8.00% - 8.20% 27,500.00 8.70% - 8.85% 28,968.25 Sub-Total - 5,03,134.92 - 3,55,948.41

Details of term loans from banks (Secured) From the Balance Sheet date

Interest Rate range


Amountiii) Half yearly -Maturing within 1 year 7.15% - 10.50% 1,85,944.44 7.45% - 10.50% 1,61,666.67 Maturing between 1 year to 3 years 6.80% - 10.50% 3,49,554.90 7.45% - 10.50% 3,33,666.67 Maturing beyond 3 years to 5 years 7.75% - 10.50% 1,20,667.33 8.55% - 10.50% 63,000.00 Sub-Total 6,56,166.67 5,58,333.34 iv) Yearly -Maturing within 1 year 8.05%-9.70% 1,37,066.67 8.20%-9.34% 75,333.33 Maturing between 1 year to 3 years 8.05%-9.70% 2,38,983.33 8.20%-9.70% 3,18,133.33 Maturing between 3 years to 5 years 8.65%-9.70% 24,000.00 8.20%-9.70% 73,050.00 Sub-Total 4,00,050.00 4,66,516.67 Total for repayable in installments 15,69,351.59 13,90,798.41 Total (1+2) (As per contractual terms) 20,80,486.59 16,82,698.41 Less Unamortized Finance Cost (385.60) 405.76 Total Amortized Cost 20,80,872.19 16,82,292.65

Details of Secured term loans from banks in foreign currency


rangeAmount Interest Rate

rangeAmount

Repayable on maturity :Maturing within 1 year LIBOR plus

spread 1.44% -2.20%

18,297.55 LIBOR plus spread 2.00% -

2.20% 63,399.36

Total 18,297.55 63,399.36 Less Unamortized Finance Cost 3.49 (4.61)Total Amortized Cost 18,294.06 63,403.97




258




Details of External Commercial Borrowings (USD & Euro)From the Balance Sheet date

Interest Rate range


Amount

Maturing between 1 year to 3 years LIBOR plus spread 1.10 -

1.50% 2,76,243.96 LIBOR plus

spread 1.10% 1,39,698.35

2,76,243.96 1,39,698.35 Less Unamortized Finance Cost 2,465.13 2,301.58 Total 2,73,778.83 1,37,396.77

Details of associated liabilities related to Securitization transactions From the Balance Sheet date

Interest Rate range


Amount

Maturing within 1 year 8.73% - 9.03% 3,86,697.24 5.2%-9.25% 1,94,427.46 Maturing between 1 year to 3 years 8.80% - 9.03% 4,48,365.86 5.2%-9.25% 2,13,893.72 Maturing between 3 years to 5 years 9.03% 53,107.72 5.2%-9.25% 26,413.31

8,88,170.82 4,34,734.49 Less Unamortized Finance Cost - - Total 8,88,170.82 4,34,734.49

Details of Secured term loans from NHBFrom the Balance Sheet date

Interest Rate range


Amount1) Repayable in installments :Quarterly -Maturing within 1 year 8.85% 22.70 9.05%-9.65% 2,206.40 Maturing between 1 year to 3 years - 9.30%-9.55% 973.80 Total 22.70 3,180.20 Less Unamortized Finance Cost - - Total Amortized Cost 22.70 3,180.20



rangeAmount

Repayable on maturity :Maturing within 1 year 7.80% - 9.00% 26,400.00 8.00% - 8.40% 5,813.54 Total 26,400.00 5,813.54 Less Unamortized Finance Cost - - Total Amortized Cost 26,400.00 5,813.54




(Secured by exclusive charge on receivables under loan contracts and book debts to the extent of 100% of outstanding secured loans)

Details of Unsecured term loans from banksAs at 31 March 2020 As at 31 March 2019

259






rangeAmount

Repayable on maturity :Maturing within 1 year 7.20%-8.50% 30,000.00 7.75% - 9.40% 1,13,850.00 Maturing between 1 year to 3 years 7.55%-7.90% 15,175.00 - Total 45,175.00 1,13,850.00 Less Unamortized Finance Cost - - Total Amortized Cost 45,175.00 1,13,850.00



rangeAmount

Repayable on maturity :Maturing within 1 year - 8.70%-9.80% 22,600.50 Total - 22,600.50 Less Unamortized Finance Cost - - Total Amortized Cost - 22,600.50

18 DepositsRs. in lakhs

31 March 2020 31 March 2019 At amortised cost

Deposits (Unsecured)- Public deposits 8,78,138.98 5,63,093.41

Total 8,78,138.98 5,63,093.41 Note: There is no other deposit measured at FVTPL or designated at FVTPL.



rangeAmount

Repayable on maturity :Maturing within 1 year 7.00% - 9.60% 1,66,223.58 7.30% - 10.10% 1,36,237.00 Maturing between 1 year to 3 years 6.9% - 9.15% 6,07,810.66 7.35% - 9.60% 3,65,323.25 Maturing beyond 3 years 7.65% - 9.15% 1,08,286.07 7.35% - 10.10% 64,702.42 Total at face value 8,82,320.31 5,66,262.68 Less: Unamortised discounting charges 4,181.33 3,169.27 Total amortised cost 8,78,138.98 5,63,093.41

19 Subordinated liabilities 31 March 2020 31 March 2019

At Amortised costSubordinated redeemable non-convertible debentures - private placement 1,32,106.39 1,36,491.33 Subordinated redeemable non-convertible debentures - retail public issue 2,46,003.98 2,45,716.76 Total 3,78,110.37 3,82,208.09 Subordinated liabilities in India 3,78,110.37 3,82,208.09 Subordinated liabilities outside India - - Total 3,78,110.37 3,82,208.09

Note: There is no Subordinated liability measured at FVTPL or designated at FVTPL.

Loans repayable on demand - Cash credit facilities with banks (Secured)

Details of Deposits (Unsecured) - Public deposits :



Details of Inter-corporate deposits (ICDs) other than related parties :


260



Rs. in lakhs19 Subordinated liabilities (Continued)



rangeAmount

A) Issued on private placement basis (wholesale) - Repayable on maturity :Maturing within 1 year 9.50% - 9.80% 27,220.00 9.85% - 10.02% 14,500.00 Maturing between 1 year to 3 years 9.80% - 10.50% 17,050.00 9.50% - 10.50% 37,270.00 Maturing between 3 years to 5 years 8.40% - 9.70% 35,280.00 9.50% - 10.15% 19,780.00 Maturing beyond 5 years 8.90% - 9.50% 53,000.00 8.40% - 9.60% 65,500.00 Sub-total at face value (A) 1,32,550.00 1,37,050.00

B) Issued on retail public issue - Repayable on maturity :Maturing between 1 year to 3 years 8.34% - 8.70% 5,465.78 8.34% - 8.70% 5,465.78 Maturing between 3 years to 5 years 7.75% - 8.80% 7,165.96 8.44% - 8.80% 1,233.72 Maturing beyond 5 years 7.90% - 9.50% 2,36,108.62 7.75% - 9.50% 2,42,040.86 Sub-total at face value (B) 2,48,740.36 2,48,740.36 Total at face value (A+B) 3,81,290.36 3,85,790.36 Less: Unamortised discounting charges 3,179.99 3,582.27 Total amortised cost 3,78,110.37 3,82,208.09

20 Other financial liabilitiesRs. in lakhs

31 March 2020 31 March 2019

Interest accrued but not due on borrowings 2,14,357.63 1,90,089.74 Unclaimed dividends 68.66 89.36 Unclaimed matured deposits and interest accrued thereon 522.20 504.63 Deposits / advances received against loan agreements 5,744.55 6,937.36 Insurance premium payable 1,401.75 2,974.74 Salary, Bonus and performance payable 7,167.57 5,263.32 Provision for expenses 7,917.22 7,835.53 Gross obligation at fair value to acquire non-controlling interest 35,560.00 68,595.10 Lease liabilities (refer note 41 ) 24,914.27 - Others 1,763.49 1,784.77

Total 2,99,417.34 2,84,074.55

21 ProvisionsRs. in lakhs

31 March 2020 31 March 2019

Provision for employee benefits - Gratuity 3,406.06 3,594.94 - Leave encashment 8,960.31 7,056.12 - Bonus, incentives and performance pay 8,279.19 13,920.97 Provision for loan commitment 493.43 921.90 Total 21,138.99 25,493.93

Details of Subordinated liabilities (at Amortised cost) - Subordinated redeemable non-convertible debentures:


261



Rs. in lakhs22 Other non-financial liabilities


Deferred subvention income 2,691.27 2,692.81 Statutory dues and taxes payable 8,036.90 5,820.29 Others 641.93 657.75

Total 11,370.10 9,170.85

23 Equity Share capitalRs. in lakhs

As at 31 March 2020

As at 31 March 2019

70,00,00,000 (31 March 2019: 70,00,00,000) Equity shares of Rs.2/- each 14,000.00 14,000.00 5,000.00 5,000.00

61,77,64,960 (31 March 2019: 61,77,64,960) Equity shares of Rs.2/- each fully paid up 12,355.30 12,355.30 48.35 57.76

12,306.95 12,297.54

No. of shares Rs. in lakhs No. of shares Rs. in lakhs

a)

Issued, Subscribed and paid-up:Balance at the beginning of the year 61,77,64,960 12,355.30 61,77,64,960 12,355.30 Add : Fresh allotment of shares : - - - - Balance at the end of the year 61,77,64,960 12,355.30 61,77,64,960 12,355.30

24,17,256 48.35 28,88,245 57.76

Adjusted Issued, Subscribed and paid-up Share capital 61,53,47,704 12,306.95 61,48,76,715 12,297.54

b)

31,62,07,660 6,324.15 31,62,07,660 6,324.15 Percentage of holding (%) 51.19% 51.19% 51.19% 51.19%

c) Shareholders holding more than 5 percent of the aggregate shares:

Mahindra & Mahindra Limited 31,62,07,660 6,324.15 31,62,07,660 6,324.15 Percentage of holding (%) 51.19% 51.19% 51.19% 51.19%

d)

The Company has only one class of equity shares having a par value of Rs.2/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the board of directors and approved by the shareholders in the annual general meeting is paid in Indian rupees. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Issued, Subscribed and paid-up:

Authorised:

Reconciliation of number of equity shares and amountoutstanding:

Holding and ultimate holding company : Mahindra & Mahindra Limited

Less : 24,17,256 (31 March 2019: 28,88,245) Equity shares of Rs.2/- each fully paid up issued to ESOS Trust but not yet allottedto employees

Terms / rights attached to equity shares :

Adjusted Issued, Subscribed and paid-up Share capital

31 March 2020 31 March 2019

Number of equity shares held by holding company or ultimate holding company including shares held by its subsidiaries / associates:

Less: Shares issued to ESOS Trust but not yet allotted toemployees

50,00,000 (31 March 2019: 50,00,000) Redeemable preference shares of Rs.100/- each

262



Rs. in lakhs23 Equity Share capital (Continued)

Description of the nature and purpose of Other Equity :Statutory reserve

Capital redemption reserve (CRR)

Securities premium reserve

General reserve

Debenture Redemption Reserve (DRR)

Employee stock options outstanding

Retained earnings

Until issuance of notification dated 16 August 2019 by MCA through the Companies (Share capital and Debentures) Amendment Rules,2019, the Companies Act, 2013 required companies that issue debentures to create a debenture redemption reserve from annual profits untilsuch debentures are redeemed. The Company was required to transfer a specified percentage (as provided in the Companies Act, 2013 ) ofthe outstanding redeemable debentures to debenture redemption reserve. The amounts credited to the debenture redemption reserve may beutilised only to redeem debentures. On completion of redemption, the reserve may be transferred to Retained Earnings.Pursuant to issuance of notification dated 16 August 2019 by MCA through the Companies (Share capital and Debentures) AmendmentRules, 2019, the DRR is no longer required for certain class of companies, including listed NBFCs registered with RBI under section 45-IAof the RBI Act, 1934, in the case of public issue of debentures and privately placed debentures. Accordingly, the Company has not createdany amount of DRR for the current financial year and written-back the carrying amount of DRR created in the earlier years to Retainedearnings as it is no longer required.

The Employee Stock Options outstanding represents amount of reserve created by recognition of compensation cost at grant date fair valueon stock options vested but not exercised by employees and unvested stock options in the Statement of profit and loss in respect of equity-settled share options granted to the eligible employees of the Company and its subsidiaries in pursuance of the Employee Stock OptionPlan.

Retained earnings or accumulated surplus represents total of all profits retained since Company's inception. Retained earnings are creditedwith current year profits, reduced by losses, if any, dividend payouts, transfers to General reserve or any such other appropriations tospecific reserves.

Statutory reserve represents reserve fund created pursuant to Section 45-IC of the RBI Act, 1934 through transfer of specified percentage ofnet profit every year before any dividend is declared. The reserve fund can be utilised only for limited purposes as specified by RBI fromtime to time and every such utilisation shall be reported to the RBI within specified period of time from the date of such utilisation.

Capital redemption reserve represents reserve created pursuant to Section 55 (2) (c) of the Companies Act, 2013 by transfer of an amountequivalent to nominal value of the Preference shares redeemed. The CRR may be utilised by the Company, in paying up unissued shares ofthe Company to be issued to the members of the Company as fully paid bonus shares in accordance with the provisions of the CompaniesAct, 2013.

Other Equity

Securities premium reserve is used to record the premium on issue of shares. The reserve can be utilised only for limited purposes such asissuance of bonus shares in accordance with the provisions of the Companies Act, 2013.

General reserve is created through annual transfer of profits at a specified percentage in accordance with applicable regulations under theerstwhile Companies Act, 1956. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than10% of the paid up capital of the Company for that year, then the total dividend distribution is less than the total distributable profits forthat year. Consequent to introduction of the Companies Act, 2013, the requirement to mandatorily transfer specified percentage of netprofits to General reserve has been withdrawn. However, the amount previously transferred to the General reserve can be utilised only inaccordance with the specific requirements of the Companies Act, 2013.

263



Rs. in lakhs23 Equity Share capital (Continued)

Details of dividends proposedRs. in lakhs

31 March 2020 31 March 2019

Face value per share (Rupees) 2.00 2.00 Dividend percentage 0% 325%Dividend per share (Rupees) - 6.50

Dividend on Equity shares - 40,154.72 Estimated dividend distribution tax - 7,631.31 Total dividend including estimated dividend distribution tax - 47,786.03

The dividends proposed for the financial year ended 31 March 2019 have been paid to shareholders in the subsequent financial year andaccounted on payment basis on approval of the members of the Company at relevant Annual General Meeting. The proposed dividend of325% pertaining to financial year ended 31 March 2019 included special dividend of 125%.The Board of Directors of the Company did not recommend any dividend for the current financial year ended 31 March 2020.

264


24 Interest incomeRs. in lakhs

31 March 2020 31 March 2019I) On financial instruments measured at Amortised cost

Interest on loans 11,22,483.82 9,72,258.70 Income from bill discounting 6,157.37 6,535.21 Interest income from investments 10,254.47 16,117.25 Interest on term deposits with banks 6,864.35 2,017.44 Other interest income 1.27 17.90

II) On financial instruments measured at fair value through OCIInterest income from investments in debt instruments - 6.40

Total 11,45,761.28 9,96,952.90

25 Fees and commission incomeRs. in lakhs

31 March 2020 31 March 2019Fees / charges on loan transactions 7,483.16 8,606.49 Commission / brokerage received from mutual fund distribution/other debt products 1,744.30 2,424.02 Collection fees related to transferred assets under securitisation transactions 1,185.90 608.31 Total 10,413.36 11,638.82

26 Net gain / (loss) on fair value changesRs. in lakhs

31 March 2020 31 March 2019A) Net gain / (loss) on financial instruments at FVTPL

i) On trading portfolio - Investments (191.35) 191.35

ii) On financial instruments designated at FVTPL (53.54) 77.88 B) Others - Mutual fund units 2,806.45 492.52 C) Total Net gain / (loss) on financial instruments at FVTPL 2,561.56 761.75

Fair value changes : - Realised - 51.26 - Unrealised 2,561.56 710.49

D) Total Net gain / (loss) on financial instruments at FVTPL 2,561.56 761.75

27 Sale of servicesRs. in lakhs

31 March 2020 31 March 2019Income from insurance broking business services 24,682.92 23,890.65 Income from mutual fund business 1,285.89 2,330.25 Total 25,968.81 26,220.90


Note: There is no loan asset measured at FVTPL.

Rs. in lakhs

265



Rs. in lakhs

28 Other incomeRs. in lakhs

31 March 2020 31 March 2019Net gain on derecognition of property, plant and equipment 70.09 80.41 Net gain on sale of investments measured at amortised cost 5,093.66 (108.13)Income from shared services 6,143.05 5,844.25 Others 43.66 98.85 Total 11,350.46 5,915.38

29 Finance costsRs. in lakhs

31 March 2020 31 March 2019On financial liabilities measured at Amortised costInterest on deposits 67,242.25 35,708.17 Interest on borrowings 1,95,988.64 1,52,024.29 Interest on debt securities 2,47,778.04 2,18,504.92 Interest on subordinated liabilities 34,232.87 31,950.77 Net loss in fair value of derivative financial instruments (11,972.85) 2,693.63 Interest expense on lease liabilities (refer note 41 ) 2,016.58 - Other borrowing costs 3,770.84 2,346.20 Total 5,39,056.37 4,43,227.98

30 Impairment on financial instrumentsRs. in lakhs

31 March 2020 31 March 2019On financial instruments measured at Amortised costBad debts and write offs 88,937.67 1,80,171.45 Loans 1,43,219.35 (1,06,616.66)Investments (146.33) (1,016.69)Loan commitment (165.08) (827.27)Trade receivables and other contracts 52.22 - Total 2,31,897.83 71,710.83

31 Employee benefits expensesRs. in lakhs

31 March 2020 31 March 2019Salaries and wages 1,39,494.36 1,31,625.15 Contribution to provident funds and other funds 11,293.47 8,853.61 Share based payments to employees 5,889.70 3,109.42 Staff welfare expenses 4,304.49 4,206.58 Total 1,60,982.02 1,47,794.76

32 Depreciation, amortization and impairmentRs. in lakhs

31 March 2020 31 March 2019Depreciation on Property, Plant and Equipment 6,753.48 6,064.40 Amortization and impairment of intangible assets 1,918.72 1,488.92 Depreciation on Right of Use Asset (refer note 41 ) 6,015.18 - Total 14,687.38 7,553.32

Note: There is no financial liability measured at FVTPL.

Note: There is no financial instrument measured at FVOCI.

266



Rs. in lakhs

33 Other expensesRs. in lakhs

31 March 2020 31 March 2019Rent # (refer note 41) 3,857.35 8,415.45 Rates and taxes, excluding taxes on income 2,599.75 248.96 Electricity charges 2,214.47 2,606.04 Repairs and maintenance 1,453.86 1,889.34 Communication Costs 3,331.79 3,662.44 Printing and Stationery 1,519.00 2,013.91 Advertisement and publicity 2,020.32 3,707.52 Directors' fees, allowances and expenses 567.80 464.31 Auditor's fees and expenses - - Audit fees 100.90 106.67 - Taxation matters 1.64 4.14 - Other services 69.25 101.94 - Reimbursement of expenses 2.66 3.45 Legal and professional charges 10,953.42 11,803.84 Insurance 5,339.57 3,871.57 Manpower outsourcing cost 5,205.65 3,848.01 Donations 3,334.57 2,923.23 Corporate Social Responsibility (CSR) expenses 869.62 581.23 Conveyance and travel expenses 18,318.37 18,350.25 Other expenditure 23,158.92 15,844.90 Total 84,918.91 80,447.20

34 Earning Per Share (EPS)Rs. in lakhs

31 March 2020 31 March 2019Profit for the year (Rs. in lakhs) 1,07,514.53 1,82,729.83 Weighted average number of Equity Shares used in computing basic EPS 61,50,43,690 61,46,21,661 Effect of potential dilutive Equity Shares on account of unexercised employee stock options 13,31,431 13,32,128 Weighted average number of Equity Shares used in computing diluted EPS 61,63,75,121 61,59,53,789 Basic Earnings per share (Rs.) (Face value of Rs. 2/- per share) 17.48 29.73 Diluted Earnings per share (Rs.) 17.44 29.67

35 Accumulated Other Comprehensive IncomeRs. in lakhs

31 March 2020 31 March 2019A) Items that will not be reclassified to profit or loss

Balance at the beginning of the year 295.78 - - Net gain / (loss) on equity instruments through OCI 268.65 454.65 Income tax impact thereon (23.17) (158.87)

Balance at the end of the year : Subtotal (A) 541.26 295.78 B) Items that will be reclassified to profit or loss

Balance at the beginning of the year 2,962.38 50.62 - Exchange differences in translating the financial statements of a foreign associate 3,900.25 2,398.78

- Net gain / (loss) on debt instruments through OCI 767.09 788.52 Income tax impact thereon (115.97) (275.54)

Balance at the end of the year : Subtotal (B) 7,513.75 2,962.38 Accumulated Other Comprehensive Income (A + B) 8,055.01 3,258.16

# The Group has adopted Ind AS 116, Leases, effective 1 April 2019 using modified retrospective approach of transition without restating the figures for prior periods. On application of Ind AS 116, the nature of expense has changed from lease rent in previous periods to depreciation cost for the ROU asset and finance cost for interest accrued on lease liability. Ind AS 116 also provides for certain options and exemptions to recognise short-term lease payments and payments for leases of low-value assets, which are not included in the measurement of the lease liability and ROU asset, as expense on a straight line basis over the lease term in the statement of profit or loss.Accordingly, rent expenses for the year ended 31 March 2020 comprises of short-term lease payments and payments for leases of low-value assets recognized as per Ind AS 116, Leases.

267

Notes to the Financial Statements (Continued)for the year ended 31 March 2020Rs. in lakhs

36

a)

Particulars Terms and conditionsType of arrangement Contractual life 3 years from the date of each vestingNumber of vested options exercisable Minimum of 50 or number of options vested whichever is lowerMethod of settlement By issue of shares at exercise priceVesting conditions 20% on expiry of 12 months from the date of grant

20% on expiry of 24 months from the date of grant20% on expiry of 36 months from the date of grant20% on expiry of 48 months from the date of grant20% on expiry of 60 months from the date of grant

b)

Particulars Year ended 31 March 2020


N/AGrant dated 24 October

2018Exercise price (Rs.) 2.00 No. of years vesting 5 Fair value of option (Rs.) 355.34

The key assumptions used in black-scholes model for calculating fair value as on the date of grant are:

Year ended31 March

2020Year ended

31 March 2019

Variables#N/A

Grant dated 24 October

20181) Risk free interest rate 7.77%2) Expected life 4.51 years3) Expected volatility 37.61%4) Dividend yield 1.07%

time of option grant (Rs.) 374.35

# the values mentioned against each of the variables are based on the weighted average vesting period.

5) Price of the underlying share in the market at the


Employee Stock Option PlanThe Company had allotted 48,45,025 Equity shares (face value of Rs.2/- each) under Employee Stock Option Scheme 2010 at par on 3February 2011 to Mahindra and Mahindra Financial Services Limited Employees’ Stock Option Trust set up by the Company. The Trust holdsthese shares for the benefit of the employees and issues them to the eligible employees as per the recommendation of the CompensationCommittee. Upon exercise of stock options under the scheme by eligible employees, the Trust had issued 32,13,044 equity shares to employeesup to 31 March 2020 (31 March 2019: 27,42,055 equity shares), of which 4,70,989 equity shares (31 March 2019: 3,99,748 equity shares)were issued during the current year.

The terms and conditions of the Employees stock option scheme 2010 are as under :

Employees share based payment plan administered through ESOS Trust

Options granted during the year:During the year ended 31 March 2020, the Company has not granted any stock options (31 March 2019: 21,94.249) to the eligibleemployees under the Employees’ Stock option scheme 2010. The details of stock options are as under:

268

Notes to the Financial Statements (Continued)for the year ended 31 March 2020Rs. in lakhs


36 Employee Stock Option Plan (Continued) :c) Summary of stock options:

Particulars No. of stock options

Weighted average


No. of stock options

Weighted average exercise

price (Rs.)Options outstanding at the beginning of the year 28,66,916 2.00 10,83,987 2.00Options granted during the year - 2.00 21,94,249 2.00Options forfeited / lapsed during the year 42,882 2.00 9,684 2.00Options expired during the year 2,703 2.00 1,888 2.00Options exercised during the year 4,70,989 2.00 3,99,748 2.00Options outstanding at the end of the year 23,50,342 2.00 28,66,916 2.00Options vested but not exercised at the end of the year 5,02,244 2.00 1,76,151 2.00

d) Information in respect of options outstanding :

Exercise price No. of stock options

Weighted average

remaining lifeNo. of stock

optionsWeighted

average remaining life

Rs.2.00 23,50,342 54 months 28,66,916 62 months

e) Average share price at recognised stock exchange on the date of exercise of the option is as under:

Date of exercise

27 April 2019 to 22 March 2020 27 April 2018 to 22 March 2019

f) Determination of expected volatility

In respect of stock options granted under Employee Stock Option Scheme 2010, the accounting is done as per the requirements of Ind AS102. Consequently, Rs.2,941.80 lakhs (31 March 2019: Rs.2,255.02 lakhs) has been included under 'Employee Benefits Expense' as'Share-based payment to employees' based on respective grant date fair value, after adjusting for reversals on account of options forfeited.The amount includes cost reimbursements to the holding company of Rs.51.60 lakhs (31 March 2019 : Rs. 27.40 lakhs) in respect ofoptions granted to employees of the Company and excludes net recovery of Rs.56.96 lakhs (31 March 2019 : Rs.100.36 lakhs) from itssubsidiaries for options granted to their employees.

335.73 441.05

The measure of volatility used in the Black-Scholes option pricing model is the annualized standard deviation of the continuouslycompounded rates of return on the stock over a period of time. The determination of expected volatility is based on historical volatility of the stock over the most recent period that is generallycommensurate with the expected life of the option being valued. The period considered for volatility is adequate to represent a consistenttrend in the price movements and the movements due to abnormal events are evened out.Accordingly, since each vest has been considered as a separate grant, the model considers the volatility for periods, corresponding to theexpected lives of different vests, prior to the grant date. Volatility has been calculated based on the daily closing market price of theCompany's stock price on NSE over these years. Similar approach was followed in determination of expected volatility based on historicalvolatility for all the grants under the scheme.

Year ended 31 March 2020 Year ended 31 March 2019Weighted averageshare price (Rs.)

Date of exercise Weighted averageshare price (Rs.)



269


37

Gratuity

Post retirement medical

Through its defined benefit plans the company is exposed to a number of risks, the most significant of which are detailed below:Asset volatility -

Change in bond yields -

Inflation risk -

Life expectancy -

Particulars

2020 2019I. Amounts recognised in the Statement of Profit & Loss

Current service cost 1,435.15 1,259.75 Net Interest cost 250.19 174.07 Past service cost 17.57 - Actuarial (gain)/loss (1,091.19) 4.03 Adjustment due to change in opening balance of Plan assets (339.69) (186.31) Total expenses included in employee benefits expense 272.03 1,251.54

II. Amount recognised in Other Comprehensive incomeRemeasurement (gains)/losses:a) Actuarial (gains)/losses arising from changes in -

- demographic assumptions 35.02 (23.82) - financial assumptions (1,248.78) (1,329.02) - experience adjustments (364.72) (126.63)

b) (2.90) (2.51)

(1,581.38) (1,481.98) III. Changes in the defined benefit obligation

Opening defined benefit obligation 8,804.50 6,156.58 Add/(less) on account of business combination/transfers (0.54) - Current service cost 1,435.15 1,259.75 Past service cost (1,091.19) - Interest expense 675.29 474.74 Remeasurement (gains)/losses arising from changes in - - demographic assumptions (33.32) 59.81 - financial assumptions 1,016.49 87.74 - experience adjustments 214.73 1,054.65 Benefits paid (319.02) (288.76) Closing defined benefit obligation 10,702.08 8,804.51

Total amount recognised in other comprehensive income


Employee benefitsGeneral description of defined benefit plans

The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment ofGratuity Act, 1972 or the Company scheme applicable to the employee. The benefit vests upon completion of five years of continuous service and oncevested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective ofvesting. The Company makes annual contribution to the gratuity scheme administered by the Life Insurance Corporation of India through its GratuityTrust Fund.

The Company provides for post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto a specified agethrough mediclaim policy on which the premiums are paid by the Company. The eligibility of the employee for the benefit as well as the amount ofmedical cover purchased is determined by the grade of the employee at the time of retirement.

The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets underperform compared to this yield,this will create or increase a deficit. The defined benefit plans may hold equity type assets, which may carry volatility and associated risk.

The present value of some of the defined benefit plan obligations are calculated with reference to the future salaries of plan participants. As such, anincrease in the salary of the plan participants will increase the plan's liability. The post retirement medical benefit obligation is sensitive to medicalinflation and accordingly, an increase in medical inflation rate would increase the plan's liability.

The present value of defined benefit plan obligation is calculated by reference to the best estimate of the mortality of plan participants, both during andafter the employment. An increase in the life expectancy of the plan participants will increase the plan's liability.

Funded PlanGratuity

Rs. in lakhs

Return on plan assets, excluding amount included in netinterest expense/ (income)

Year ended 31 March

Details of defined benefit plans as per actuarial valuation are as follows:

A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plan'sinvestment in debt instruments.

270



Rs. in lakhs

37

Particulars

2020 2019IV. Change in the fair value of plan assets during the year

Opening Fair value of plan assets 5,209.55 3,655.91 Interest income 353.36 5.90 Expected return on plan assets (278.79) 46.50 Contributions by employer 2,024.73 1,573.23 Adjustment due to change in opening balance of Plan assets 306.19 216.77 Actual Benefits paid (319.02) (288.76) Closing Fair value of plan assets 7,296.02 5,209.55

V. Net defined benefit obligationDefined benefit obligation 10,702.08 8,804.51 Fair value of plan assets 7,296.02 5,209.55 Surplus/(Deficit) 3,406.06 3,594.95 Current portion of the above 1,008.21 900.54 Non current portion of the above 2,397.85 2,694.40

Actuarial assumptions and SensitivityI. Actuarial assumptions

Discount Rate (p.a.) 6.90% 7.67%Attrition rate 12.41 for age

upto 30, 8.21 for age 31-44,

21.00 for 44 and above

19%-43% for age upto 35, 3%-36% for age 36-45, 3%-17% for age 46 and above

Expected rate of return on plan assets (p.a.)Rate of Salary increase (p.a.) 7.00% 5-7%In-service Mortality Indian Assured

Lives Mortality (2012-14)

Ultimate

Indian Assured Lives Mortality

(2006-08)Ultimate

II.

One percentage point increase in discount rate (1,019.28) (1469.99)One percentage point decrease in discount rate 1,184.34 1501.60One percentage point increase in Salary growth rate 1,170.81 1498.94One percentage point decrease in Salary growth rate (1,026.91) (1490.60)

III. Maturity profile of defined benefit obligationWithin 1 year 2,012.57 1,775.85 Between 1 and 5 years 10,768.55 8,575.72

38

Details of defined benefit plans as per actuarial valuation are as follows: (Continued)Funded Plan

GratuityYear ended 31 March

Quantitative sensitivity analysis for impact of significantassumptions on defined benefit obligation are as follows:

The estimate of future salary increases, considered in actuarial valuation, considers inflation, seniority, promotion and other relevant factors, such assupply and demand in the employment market.

Employee benefits (Continued)

The plan assets have been primarily invested in government securities and corporate bonds.

During the quarter and year ended 31 March 2020, the Company had raised funds in the overseas market amounting to Rs. 35,000.00 lakhs (equivalent to USD 50 million) through issue of Rupee denominated USD settled, Secured Notes ("Masala Bonds") under External Commercial Borrowings (ECB) accessed through approval route requiring prior approval of RBI as per ECB Master directions. These are unlisted instruments, issued on 13 February 2020 for total duration of 4 years, carrying a fixed coupon rate of 7.40%, repayable at par on maturity on 13 February 2024. The net proceeds from the issue of these Notes were applied for the purpose of on-lending, in accordance with the approvals granted by the RBI and the ECB Master Directions.

Funds raised by issue of Rupee denominated USD settled, Secured Notes ("Masala Bonds")

The Company's contribution to provident fund, superannuation fund and national pension scheme aggregating to Rs.9025.72 lakhs (31 March 2019: Rs. 5314.58 lakhs) has been recognized in the Statement of profit and loss under the head " Employee benefits expense".

271



Rs. in lakhs

39

Proceeds from issue of NCDs:Rs. in lakhs

Sr.No.



i) - 33,687.23 ii) - 1,81,012.24

Total - 2,14,699.47 - 2,100.00

40

Regulatory capitalAs at

31 March 2020As at

31 March 2019Tier - I capital 9,62,920.99 10,02,787.58 Tier - II capital 2,64,543.44 3,08,102.15 Total Capital 12,27,464.43 13,10,889.73 Risk weighted assets 62,48,547.10 64,59,392.68 Tier - I capital ratio 15.4% 15.5%Total Capital ratio 19.6% 20.3%

In terms of the requirements as per Section 71 (4) of the Companies Act, 2013 read with The Companies (Share capital and Debentures) Rules 2014,Rule no.18 (7) and applicable SEBI Issue and Listing of Debt Securities) Regulations, 2008, the Company has transferred Rs.14,667.61 lakhs toDebenture Redemption Reserve (DRR) on a prorata basis on total NCDs outstanding as at 31 March 2019, including the amount of fresh issuance duringthe year to create adequate DRR over the tenor of the debentures.Pursuant to issuance of notification dated 16 August 2019 by MCA through the Companies (Share capital and Debentures) Amendment Rules, 2019, theDRR is no longer required for certain class of companies, including listed NBFCs registered with RBI under section 45-IA of the RBI Act, 1934, in thecase of public issue of debentures and privately placed debentures. Accordingly, the Company has not created any amount of DRR for the currentfinancial year and written-back an amount of Rs. 22,370.59 lakhs being the carrying amount of DRR created in the earlier years to Retained earnings as itis no longer required.

The Group's capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. The same is donethrough a mix of either equity and/or convertible and/or combination of short term /long term debt as may be appropriate.The Group determines the amount of capital required on the basis of operations, capital expenditure and strategic investment plans. The capital structureis monitored on the basis of net debt to equity and maturity profile of overall debt portfolio of the Group.The Company is subject to the capital adequacy requirements of the Reserve Bank of India (RBI). Under RBI’s capital adequacy guidelines, as applicable,the Company is required to maintain a capital adequacy ratio consisting of Tier I and Tier II Capital. The total of Tier II Capital at any point of time, shallnot exceed 100 percent of Tier I Capital. The minimum capital ratio as prescribed by RBI guidelines and applicable to the Company, consisting of Tier Iand Tier II capital, shall not be less than 15 percent of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of off-balance sheet.The Company has complied with all regulatory requirements related to capital and capital adequacy ratios as prescribed by RBI, details of which are givenbelow :-

Capital management

The housing finance business of the Group is subject to the capital adequacy requirements of the National Housing Bank (NHB) and has complied with all regulatory requirements related to regulatory capital and capital adequacy ratios as prescribed by NHB.

Funds raised by issue of debt instruments through public issueDuring the year ended 31 March 2020, there was no capital raised by issue of debt instruments through public issue.During the corresponding previous year ended 31 March 2019, the Company has raised an amount of Rs. 2,14,699.47 lakhs by way of Public Issuance ofSecured Redeemable Non-Convertible Debentures (NCD's) and Unsecured Subordinated Redeemable Non-Convertible Debentures of the face value ofRs.1,000.00 each. The NCD's issued during the previous year were allotted on 18 January 2019 and these were listed on the BSE. The entire amount ofproceeds from these issuances were used for the purposes as stated in its 'Placement Document' and there was no unutilised amount pertaining to theseissuances. The issue expenses of Rs.2100.00 lakhs has been adjusted against underlying NCD liabilities for amortisation at effective interest rate over thetenor of respective NCDs as per the accounting policy. The details are as follows.

Secured Redeemable Non-Convertible Debentures (NCD's) of face value of Rs.1000/- each

Particulars

Unsecured Subordinated Redeemable Non-Convertible Debentures (NCD's) of face value of Rs.1000/- each

Issue expenses [transferred to amortisation account for charge off at effective interest rate of respective instruments over the tenor]

272



Rs. in lakhs

41I)

Rs. in lakhs 39,790.53 27,416.97 2,233.34 25,183.63

Rs. in lakhs 6,507.79 9,960.65 6,781.58 5,607.55 28,857.57

i) 6,015.18 ii) 2,016.58 iii) 2,481.85 iv) 1,375.50 v) 4,802.62 vi) 4,533.27 vii)

23,701.72 viii) 24,914.27

The Group has adopted Ind AS 116, Leases, effective 1 April 2019 using modified retrospective approach of transition without restating the figures forprior periods. Consequently, the Group has recognized the lease liability at the present value of the future lease payments discounted at the incrementalborrowing rate at the date of initial application and ROU asset is equal to lease liability adjusted by the amount of any prepaid or accrued lease paymentsin relation to leases which has been previously classified as operating leases under Ind AS 17 subject to certain practical expedients as allowed by theStandard.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Group’s incremental borrowingrate as at 1 April 2019. The weighted average of Group’s incremental borrowing rate applied to the lease liabilities on 1 April 2019 was in the range of 9.00-9.75%.

In the cases where assets are taken on operating lease (as lessee) -

e) Used hindsight to determine the lease term of contracts.

The following is the summary of practical expedients elected on initial application of Ind AS 116. a) Applied a single discount rate to a portfolio of leases with reasonably similar characteristics.b) Availed the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term on the date of initial applicationc) Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application.d) Applied the practical expedient to grandfather the assessment of which transactions are leases. Accordingly, Ind AS 116 is applied only to contracts that were previously identified as leases under Ind AS 17.

Leases

Transition date reconciliation as at 1 April 2019 :Operating lease commitments as per Ind AS 17 as at 31 March 2019Present value using incremental borrowing rate

Lease liabilities recognised as at 1 April 2019

Total undiscounted lease liabilities as at 31 March 2020

Rs. in lakhsAmount for the year ended / As at 31

March 2020Depreciation charge for Right-Of-Use assets for Leasehold premises (presented under note - 32 "Depreciation, amortization and impairment")Interest expense on lease liabilities (presented under note - 29 "Finance costs")Expense relating to short-term leases (included in Rent expenses under note 33 " Other expenses")Expense relating to leases of low-value assets (included in Rent expenses under note 33 " Other expenses")Payments for principal portion of lease liabilityAdditions to right-of-use assets during the yearCarrying amount of right-of-use assets at the end of the reporting period by class of underlying asset -

Maturity Analysis - Contractual Undiscounted Cash Flow as at 31 March 2020:Less than 1 year1 - 3 years3 - 5 yearsMore than 5 years

Other disclosures:On application of Ind AS 116, the nature of expense has changed from lease rent in previous periods to depreciation cost for the ROU asset and financecost for interest accrued on lease liability. Ind AS 116 also provides for certain options and exemptions to recognise short-term lease payments andpayments for leases of low-value assets which are not included in the measurement of the lease liability and ROU as expense on a straight line basis overthe lease term in the statement of profit or loss. Following table summarizes other disclosures including the note references for the expense, asset andliability heads under which certain expenses, assets and liability items are grouped.

- Property taken on lease for office premises (presented under note - 11 "Property, plant and equipments")Lease liabilities (presented under note - 20 "Other financial liabilities")

As a lessee, the Group’s lease asset class primarily consist of buildings or part thereof taken on lease for office premises and certain IT equipments usedfor operating activities. The Group, previously classified these leases as operating leases under Ind AS 17 based on its assessment that the lessoreffectively retained substantially all the risks and benefits incidental to ownership of the underlying asset and hence, the lease payments were recognizedas an expense in the Statement of profit and loss.

Less:- Adjustments for recognising exemption for short term leases

273



Rs. in lakhs

41II)

i)ii)

Rs. in lakhsParticulars Year ended

31 March 2020Year ended

31 March 2019i) New vehicles to retail customers on operating lease -

Gross carrying amount 4,925.95 13.75 Depreciation for the year 396.21 0.74 Accumulated Depreciation 427.88 13.02

ii) Used and refurbished vehicles to travel operators / taxi aggregators -

Gross carrying amount 358.71 63.40 Depreciation for the year 42.62 0.30 Accumulated Depreciation 56.49 63.10

The total future minimum lease rentals receivable for the non-cancellable lease period as at the Balance sheet date is as under:Rs. in lakhs

Particulars As at31 March 2020

As at31 March 2019

i) New vehicles to retail customers on operating lease - Not later than one year 1,451.45 357.77 Later than one year but not later than five years 3,578.70 1,253.64 Later than five years - -

5,030.15 1,611.41 ii) Used and refurbished vehicles to travel operators / taxi aggregators -

Not later than one year 50.92 37.55 Later than one year but not later than five years 33.71 29.07 Later than five years - -

84.63 66.62

42

Leases (Continued)

Frauds reported during the yearThere were 381 cases (31 March 2019: 248 cases) of frauds amounting to Rs.525.51 lakhs (31 March 2019: Rs.880.16 lakhs) reported during the year.The Group has recovered an amount of Rs.178.22 lakhs (31 March 2019: Rs.112.73 lakhs) and has initiated appropriate legal actions against theindividuals involved. The claims for the un-recovered losses have been lodged with the insurance companies.

Key terms of the lease are as below :New vehicles to retail customers for a maximum period of 48 months with a minimum holding period of 24 months. Used and refurbished vehicles to travel operators / taxi aggregators with a initial agreement validity period of 36 months to 48 months and provision forextension for such period and on such terms and conditions as may be agreed by both the parties. The lease agreement also provides for minimum lock inperiod 6 months from the date of execution and cancellation with 3 months' notice from either parties. The consideration payable by the lessee is eitherminimum commitment charges or variable rental charges based on usage, make/model of the vehicle and certain other terms and conditions forming partof the lease agreement.

Rental income arising from these operating leases is accounted for on a straight-line basis over the lease terms and is included in rental income in theStatement of profit and loss. Costs, including depreciation, incurred in earning the lease income are recognised as an expense.

The Group is not required to make any adjustments on transition to Ind AS 116 for leases in which it acts as a lessor. The Group accounted for its leasesin accordance with Ind AS 116 from the date of initial application. The Group does not have any sub-lease transactions.Other details are as follows:

In the cases where assets are given on operating lease (as lessor) -

Since there is no contingent rent applicable in respect of these lease arrangements, the Group has not recognised any income as contingent income duringthe year.

274



Rs. in lakhs

43Rs. in lakhs

31 March 2020 31 March 2019

i) Contingent liabilities Claims against the Company not acknowledged as debts 14,604.85 22,279.22 Guarantees 1,11,742.35 51,236.91 Other money for which the Company is contingently liable 86.46 60.98

1,26,433.66 73,577.11 ii) Commitments Estimated amount of contracts remaining to be executed on capital account 1,576.30 615.58 Other commitments 65,926.94 97,877.80

67,503.24 98,493.38

Total 1,93,936.90 1,72,070.49

Clarification on applicability of allowances for provident fund contributions under Employees Provident Fund Act, 1952

44

Rs. in lakhsParticulars 31 March 2020 31 March 2019

Securitisations - Carrying amount of transferred assets measured at amortised cost 8,85,523.52 4,31,200.15 Carrying amount of associated liabilities (Term Loan) 8,88,170.82 4,34,734.49

Fair value of assets (A) 8,76,973.52 3,62,188.41 Fair value of associated liabilities (B) 8,16,917.73 4,13,225.89 Net position at FV (A-B) 60,055.79 (51,037.48)

The Group’s pending litigations comprise of claims against the Group primarily by the customers and proceedings pending with Income Tax, salestax/VAT and other authorities. The Group has reviewed all its pending litigations and proceedings and has adequately provided for where provisions arerequired and disclosed the contingent liabilities where applicable, in its financial statements. The amount of provisions / contingent liabilities is based onmanagement’s estimate, and no significant liability is expected to arise out of the same.

In February 2019, the Supreme Court of India in its judgment clarified the applicability of allowances that should be considered to measure obligationsunder Employees Provident Fund Act, 1952. The Group has been legally advised that there are interpretative challenges on the application of judgmentretrospectively and as such does not consider there is any probable obligations for past periods. Accordingly, based on legal advice the Company hasmade a provision for provident fund contribution from the date of the Supreme Court order.

Contingent liabilities and commitments (to the extent not provided for)

Transfer of financial assetsTransferred financial assets that are not derecognised in their entiretyThe Group has transferred certain pools of fixed rate loan receivables backed by underlying assets in the form of tractors, vehicles, equipments etc. byentering in to securitisation transactions with the Special Purpose Vehicle Trusts ("SPV Trust") sponsored by Commercial banks for considerationreceived in cash at the inception of the transaction.The Group, being Originator of these loan receivables, also acts as Servicer with a responsibility of collection of receivables from its borrowers anddepositing the same in Collection and Payout Account maintained by the SPV Trust for making scheduled payouts to the investors in Pass ThoughCertificates (PTCs) issued by the SPV Trust. These securitisation transactions also requires the Group to provide for first loss credit enhancement invarious forms, such as corporate guarantee, cash collateral, subscription to subordinated PTCs etc. as credit support in the event of shortfall in collectionsfrom underlying loan contracts. By virtue of existence of credit enhancement, the Group is exposed to credit risk, being the expected losses that will beincurred on the transferred loan receivables to the extent of the credit enhancement provided.In view of the above, the Group has retained substantially all the risks and rewards of ownership of the financial asset and thereby does not meet thederecognition criteria as set out in Ind AS 109. Consideration received in this transaction is presented as "Associated liability related to Securitisationtransactions" under Note no.17.The following table provide a summary of financial assets that have been transferred in such a way that part or all of the transferred financial assets do notqualify for derecognition, together with the associated liabilities:

275



Rs. in lakhs

45

a) Gross amount required to be spent by the Group during the year is Rs.3076.29 lakhs (31 March 2019: Rs. 3,255.24 lakhs).b) Amount spent by the Group during the year :

Rs. in lakhs

Particulars In cash Yet to be paid in cash

Total In cash Yet to be paid in cash

Total

i) Construction / acquisition of any asset - - - - - - ii) On purpose other than (i) above 3,593.88 - 3,593.88 3,261.54 - 3,261.54

46

47

48

Rs. in lakhsParticulars 31 March

2019 Cash flows

(net) Exchangedifference

Amortisation of loan origination

costs New leases

(including transition to Ind

AS 116)

31 March 2020

Debt securities 24,71,588.50 (4,97,651.40) - 523.97 - 19,74,461.07 Borrowings (Other than debt securities) 24,63,272.12 8,48,709.34 19,173.16 1,558.98 - 33,32,713.60 Deposits 5,63,093.41 3,14,373.92 - 671.65 - 8,78,138.98 Subordinated liabilities 3,82,208.09 (3,976.88) - (120.84) - 3,78,110.37 Lease liabilities - (4,802.62) - - 29,716.90 24,914.27 Dividend paid (including tax on dividend) - (51,681.23) - - Total liabilities from financing activities 58,80,162.12 6,04,971.13 19,173.16 2,633.76 29,716.90 65,88,338.29

Particulars 31 March 2018

Cash flows(net)

Exchangedifference

Amortisation of loan origination

costs 31 March

2019 Debt securities 21,94,435.96 2,79,239.64 - (2,087.10) 24,71,588.50 Borrowings (Other than debt securities) 16,52,724.46 8,08,713.46 826.29 1,007.91 24,63,272.12 Deposits 3,05,205.07 2,59,800.55 - (1,912.21) 5,63,093.41 Subordinated liabilities 3,46,249.80 35,507.23 - 451.06 3,82,208.09 Expenses incurred on issuance of Equity shares (10.93)Expenses incurred on issuance of Non-convertible debentures (2,143.51)Dividend paid (including tax on dividend) (32,153.90) - - Total liabilities from financing activities 44,98,615.29 13,48,952.54 826.29 (2,540.34) 58,80,162.12

Reconciliation of movement of liabilities to cash flows arising from financing activities

The Group has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At theyear end, the Group has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses onsuch long term contracts (including derivative contracts) has been made in the books of accounts.

Corporate Social Responsibility (CSR)During the year ended 31 March 2020, the Group has incurred an expenditure of Rs. 3,277.74 Lakhs (31 March 2019 : Rs. 3,037.49 Lakhs) towards CSRactivities which includes contribution / donations made to the trusts which are engaged in activities prescribed under section 135 of the Companies Act,2013 read with Schedule VII to the said Act and expense of Rs.298.40 Lakhs (31 March 2019: Rs. 208.26 Lakhs) towards the CSR activities undertakenby the Group.Detail of amount spent towards CSR activities :

For the year ended 31 March 2020 For the year ended 31 March 2019

During the year ended 31 March 2020, the Group had made a contribution of Rs.600.00 lakhs (31 March 2019: Rs.240.00 lakhs) to New DemocraticElectoral Trust, a Trust approved by the Central Board of Direct Taxes under Electoral Trust Scheme, 2013 to enable Electoral Trust to makecontributions to political party/parties duly registered with the Election Commission, in such manner and at such times as it may decide from time to time.This contribution was as per the provisions of section 182 of the Companies Act, 2013.

The above expenditure includes Rs.17.74 lakhs (31 March 2019: Rs.15.79 lakhs) as salary cost in respect of certain employees who have been exclusivelyengaged in CSR administrative activities which qualifies as CSR expenditure under section 135 of the Companies Act, 2013.



276


49

Segment Activities coveredFinancing activities

Other reconciling items

(Rs. in lakhs)

Financing Activities


Total Financing Activities


Total

External Revenue 11,73,352.05 26,293.56 11,99,645.61 10,16,528.10 26,557.37 10,43,085.47 Inter Segment Revenue 3,922.26 9,580.48 13,502.74 2,847.78 8,984.60 11,832.38 Total Revenue 11,77,274.31 35,874.04 12,13,148.35 10,19,375.88 35,541.97 10,54,917.85 Segment Results (Profit before tax and after interest on Financing Segment)

1,51,765.86 3,847.38 1,55,613.24 2,72,837.53 6,545.75 2,79,383.28

Share of profits in associates and joint venture 4,589.73 - 4,589.73 4,692.88 - 4,692.88 Less: Interest on Unallocated reconciling items - - - - - - Net Profit before tax 1,56,355.59 3,847.38 1,60,202.97 2,77,530.41 6,545.75 2,84,076.16 Less: Income taxes - - 51,621.20 - - 97,347.97 Net profit - - 1,08,581.77 - - 1,86,728.19 Other information:Segment Assets 80,54,496.33 42,832.99 80,97,329.32 73,44,525.53 38,280.91 73,82,806.44 Unallocated corporate assets - - 81,928.49 - - 74,790.47 Total Assets 80,54,496.33 42,832.99 81,79,257.81 73,44,525.53 38,280.91 74,57,596.91 Segment Liabilities 69,59,253.63 14,135.51 69,73,389.14 63,13,165.42 9,678.78 63,22,844.20 Unallocated corporate liabilities - - - - - - Total Liabilities 69,59,253.63 14,135.51 69,73,389.14 63,13,165.42 9,678.78 63,22,844.20

Insurance broking, asset management services and trusteeship services


Financing and leasing of automobiles, tractors, commercial vehicles, SMEs andhousing finance.

Rs. in lakhs

Segment information Primary segment (Business Segment)The Group's business is organised in to following segments and the management reviews the performance based on the business segments as mentionedbelow:

Income for each segment has been specifically identified. Expenditure, assets and liabilities are either specifically identifiable with individual segments orhave been allocated to segments on a systematic basis. Based on such allocation, segment disclosures relating to revenue, results, assets and liabilities havebeen prepared.

Since the business operations of the Company are primarily concentrated in India, the Company is considered to operate only in the domestic segment andtherefore there is no reportable geographic segment.

Particulars Year ended 31st March 2020 Year ended 31st March 2019

Secondary segment (Geographical Segment)

The following table gives information as required under the Ind AS -108 on Operating Segments:

277

Notes to Consolidated Financial Statements (Continued)for the year ended 31 March 2020

50

50.1

a) Pricing Risk

b) Currency Risk

The carrying amounts of the Group’s foreign currency exposure at the end of the reporting period are as follows :Rs. in lakhs

US Dollar Euro TotalAs at 31 March 2020Financial Assets - - - Financial Liabilities 2,72,141.24 19,931.66 2,92,072.90 As at 31 March 2019Financial Assets - - - Financial Liabilities 82,052.52 1,18,748.22 2,00,800.74

Foreign Currency Sensitivity

Currency Change in rate Effect on Profit Before Tax

Year ended 31 March 2020 INR/EUR (+/-) 1.00% (+/-) 199.32INR/USD (+/-) 1.00% (+/-) 2,721.41

Year ended 31 March 2019 INR/EUR (+/-) 0.31% (+/-) 371.85INR/USD (+/-) 0.50% (+/-) 407.98

c) Interest Rate Risk

Interest Rate risk on variable rate borrowings is managed by way of interest rate swaps.

Currency Risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Foreign currency risk arisemajorly on account of foreign currency borrowings. The Group's foreign currency exposures are managed within approved parameters. The Groupmanages its foreign currency risk by entering into forward contract and cross currency swaps.

The following tables demonstrate the sensitivity to a reasonably possible change in exchange rates, with all other variables held constant.

The sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does notreflect the exposure during the year.

The Group uses a mix of cash and borrowings to manage the liquidity & fund requirements of its day-to-day operations. Further, certain interestbearing liabilities carry variable interest rates.


Financial Risk Management Framework

Market Risk

Rs. in lakhs

In the course of its business, the Group is exposed to certain financial risks namely credit risk, interest risk, currency risk & liquidity risk. The Group'sprimary focus is to achieve better predictability of financial markets and seek to minimize potential adverse effects on its financial performance.The financial risks are managed in accordance with the risk management policy which has been approved by the Board of Directors of the respectiveGroup companies.Board of Directors of financial services businesses have established Asset and Liability Management Committee (ALCO), which is responsible fordeveloping and monitoring risk management policies for its business. The financial services businesses are exposed to high credit risk given the unbankedrural customer base and diminishing value of collateral. The credit risk is managed through credit norms established based on historical experience.

Market the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market variables such as interest rates,foreign exchange rates, etc. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilemaximising the return.

The Group's Investment in Mutual Funds is exposed to pricing risk. Other financial instruments held by the Group does not possess any riskassociated with trading. A 5 percent increase in Net Assets Value (NAV) would increase profit before tax by approximately Rs 16,988.00 lakhs(31st March 2019 : Rs 3,177 lakhs ). A similar percentage decrease would have resulted equivalent opposite impact.

278

Notes to Consolidated Financial Statements (Continued)Mahindra & Mahindra Financial Services Limitedfor the year ended 31 March 2020

5050.1

c) Interest Rate Risk (Continued)Interest Rate sensitivity

Currency Increase / decrease in basis points

(Range)

Effect on profit before tax

Year ended 31 March 2020 INR 50-270 43,562.93 Year ended 31 March 2019 INR 50-150 20,702.57

d) Off-setting of balancesThe table below summarises the financial liabilities offsetted against financial assets and shown on a net basis in the balance sheet :Financial assets subject to offsetting

Rs. in lakhsParticulars

Gross assets before offset


Assets recognised in balance sheet

Loan assetsAt 31 March' 2020 65,09,154.82 9,802.78 64,99,352.04 At 31 March' 2019 61,35,483.82 10,521.02 61,24,962.80

Financial liabilities subject to offsettingRs. in lakhs

ParticularsGross liabilities

before offsetFinancial

liabilities nettedLiabilities

recognised in balance sheet

Other financial liabilitiesAt 31 March' 2020 2,41,198.81 9,802.78 2,31,396.03 At 31 March' 2019 2,03,183.97 10,521.02 1,92,662.95

Note : The residential loan businesses has not offset financial assets and financial liabilities.

The sensitivity analyses below have been determined based on exposure to interest rate for both derivative and non-derivative instruments at theend of reporting period. For floating rate liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the reportingperiod was outstanding for the whole year.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected.With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings, as follows:

Rs. in lakhsFinancial Risk Management Framework (Continued)Market Risk (Continued)

Offsetting recognised on the balance sheet

Offsetting recognised on the balance sheet

279


5050.2 Credit Risk Management

Credit quality of financial loans and investments

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of Retail loan assetsNeither Past due nor impaired 49,49,484.43 45,73,022.06 Past Due but not impaired30 days past due 3,29,835.14 3,99,846.71 31-90 days past due 6,16,208.94 5,17,380.10 Impaired (more than 90 days) 5,48,449.65 3,83,898.47 Total Gross carrying value as at reporting date 64,43,978.16 58,74,147.34

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of Residential loan assetsNeither Past due nor impaired 4,97,117.82 4,56,340.86 Past Due but not impaired30 days past due 54,767.22 83,187.48 31-90 days past due 1,64,783.15 1,60,582.65 Impaired (more than 90 days) 1,27,721.16 1,04,763.77 Total Gross carrying value as at reporting date 8,44,389.35 8,04,874.76

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of SME loans including Bills of exchangeNeither Past due nor impaired 1,62,662.60 1,90,390.41 Past Due but not impaired30 days past due 49,797.19 38,294.97 31-90 days past due 7,849.04 3,247.19 Impaired (more than 90 days) 19,298.01 17,655.41 Total Gross carrying value as at reporting date 2,39,606.84 2,49,587.98

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of Trade AdvancesLess than 60 days past due 96,383.29 1,78,777.59 61-90 days past due 21,149.54 3,134.21 Impaired (more than 90 days) 6,402.06 5,518.76

Total Gross carrying value as at reporting date 1,23,934.89 1,87,430.56

Rs. in lakhsParticulars 31 March 2020 31 March 2019Gross carrying value of Financial Investments measured at amortised costNeither Past due nor impaired 1,12,958.95 1,20,477.05 Past Due but not impaired30 days past due - 31-90 days past due - Impaired (more than 90 days) - Total Gross carrying value as at reporting date 1,12,958.95 1,20,477.05


Credit risk is the risk that the Group will incur a loss because its customers fail to discharge their contractual obligations. The Group has a comprehensiveframework for monitoring credit quality of its retail and other loans based on Days past due monitoring at period end. Repayment by individual customersand portfolio is tracked regularly and required steps for recovery are taken through follow ups and legal recourse.

Rs. in lakhs

The following table sets out information about credit quality of loan assets and investments measured at amortised cost based on days past due information.The amount represents gross carrying amount.


280



Rs. in lakhs

5050.2 Credit Risk Management (Continued)

Credit quality of financial loans and investments (Continued)

Inputs considered in the ECL model

(i) RBI COVID-19 Regulatory Package

(ii) Impact of COVID-19

(iii) Definition of default

(iv)

(v)

(vi)


Measurement of ECLECL is measured as follows:- financial assets that are not credit impaired at the reporting date: for Stage 1, gross exposure is multiplied by PD and LGD percentage to arrive at the ECL.For Stage 2, future Expected Cash flows (Principal and Interest) for respective future years is multiplied by respective years Marginal PDs and LGDpercentage and thus arrived ECL is then discounted with the respective loan EIR to calculate the present value of ECL. In addition, in case of Billsdiscounting and Channel finance, as the average lifetime is of 90 days, a time to maturity factor of 0.25 is used in the ECL computation.- financial assets that are credit impaired at the reporting date: the difference between the gross exposure at reporting date and computed carrying amountconsidering EAD net of LGD and actual cash flows till reporting date;- undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the respective businesses of theGroup if the commitment is drawn down and the cash flows that the respective businesses of the Group expects to receive.

The Group reviews the credit quality of its loans based on the ageing of the loan at the period end. Since the group is into retail lending business, there is nosignificant credit risk of any individual customer that may impact adversely, and hence the Group has calculated its ECL allowances on a collective basis.

In assessing the impairment of financial loans under Expected Credit Loss (ECL) Model, the assets have been segmented into three stages. The three stagesreflect the general pattern of credit deterioration of a financial instrument. The differences in accounting between stages, relate to the recognition ofexpected credit losses and the measurement of interest income.The Group categorises loan assets into stages primarily based on the Days Past Due status. Stage 1 : 0-30 days past dueStage 2 : 31-90 days past dueStage 3 : More than 90 days past due

The Group considers a financial asset to be in "default" and therefore Stage 3 (credit impaired) for ECL calculations when the borrower becomes 90 dayspast due on its contractual payments. Exposure at default

Estimations and assumptions considered in ECL model

"Exposure at Default" (EAD) represents the gross carrying amount of the assets subject to impairment calculation. Future Expected Cash flows (Principaland Interest) for future years has been used as exposure for Stage 2.

The Group has made the following assumptions in the ECL Model:a) "Loss given default" (LGD) is common for all three Stages and is based on loss in past portfolio. Actual cash flows are discounted at loan EIR rate forarriving loss rate.b) "Probability of Default" (PD) is applied on Stage 1 and Stage 2 on portfolio basis and for Stage 3 PD at 100%. This is calculated as an average of the last60 months yearly movement of default rates and future adjustment for macro economic factor.

The Group applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expectedloss provision for trade advances. The Group has computed expected credit losses based on a provision matrix which uses historical credit loss experienceof the respective businesses.In accordance with the Reserve Bank of India (RBI) notification no. RBI/2019-20/186 DOR.No.BP.BC.47/21.04.048/2019-20 dated 27th March, 2020 andRBI/2019-20/220 DOR.No.BP.BC.63/21.04.048/2020-21 dated April 17, 2020 relating to ‘COVID-19 - Regulatory Package’, the Group, as per the boardapproved policy of respective businesses and ICAI advisories, has granted moratorium upto three months on the payment of installments falling duebetween March 1, 2020 and May 31, 2020 to all eligible borrowers. And in respect of accounts overdue but standard (i.e., stage 1 and stage 2) at 29February 2020 where moratorium benefit has been granted, for the purpose of staging of those accounts and for determination of impairment loss allowanceas at 31 March 2020, the days past due status as on 29 February 2020 has been considered.

The impact of COVID-19 on the global economy and how governments, businesses and consumers respond is uncertain. This uncertainty is reflected in the Group’s assessment of impairment loss allowance on its loans which are subject to a number of management judgments and estimates. In relation to COVID-19, judgments and assumptions include the extent and duration of the pandemic, the impacts of actions of governments and other authorities, and the responses of businesses and consumers in different industries, along with the associated impact on the global economy. While the methodologies and assumptions applied in the impairment loss allowance calculations remained unchanged from those applied while preparing the financial results for the period ended March 2019, the Group has separately incorporated estimates, assumptions and judgments specific to the impact of the COVID-19 pandemic and the associated support packages in the measurement of impairment loss allowance and has recognized an overlay in the statement of profit and loss. The Group’s impairment loss allowance estimates are inherently uncertain and, as a result, actual results may differ from these estimates.

281



Rs. in lakhs


Inputs considered in the ECL model (Continued)(vii)

(viii)

(ix)

(x) Analysis of inputs to the ECL model of Retail Loan with respect to macro economic variable

Upside Base Downside% % %

Probability Assigned 0 70 30Agriculture ( % real change p.a.) 2020 5.7 3.5 1.3

2021 5.4 3.2 1.02022 5.6 3.4 1.22023 5.5 3.3 1.12024 6.0 3.8 1.6

Real GDP ( % change p.a.) 2020 7.7 6.7 5.72021 7.8 6.8 5.82022 7.7 6.7 5.72023 7.5 6.5 5.52024 7.4 6.4 5.4

Policy for write off of Loan Assets

Forward Looking Information

The gross carrying amount of a financial asset is written off when there is no realistic prospect of further recovery. This is generally the case when theGroup determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to thewrite- off. However, financial assets that are written off could still be subject to enforcement activities under the Group’s recovery procedures, taking intoaccount legal advice where appropriate. Any recoveries made from written off assets are netted off against the amount of financial assets written off duringthe year under "Bad debts and write offs" forming part of "Impairment on financial instruments" in Statement of profit and loss.

When determining whether the credit risk has increased significantly since initial recognition, the Group considers both quantitative and qualitativeinformation and analysis based on the Group’s historical experience, including forward-looking information. The Group considers reasonable andsupportable information that is relevant and available without undue cost and effort. The Group's accounting policy is not to use the practical expedient thatthe financial assets with 'low' credit risk at the reporting date are deemed not to have had a significant increase in credit risk. As a result the Group monitorsall financial assets and loan commitments that are subject to impairment for significant increase in credit risk.Based on the assessment by the Group, the RBI moratorium relaxation offered to the customers recognising the potential detrimental impact of COVID-19has not been deemed to be automatically triggering significant increase in credit risk. The Group continues to recognize interest income during themoratorium period and in the absence of other credit risk indicators, the granting of a moratorium period does not result in accounts becoming past due andautomatically triggering Stage 2 or Stage 3 classification criteria.As a part of the qualitative assessment of whether a customer is in default, the Group also considers a variety of instances that may indicate unlikeliness topay. In such instances, the Group treats the customer at default and therefore assesses such loans as Stage 3 for ECL calculations, following are suchinstances:- A Stage 3 customer having other loans which are in Stage 1 or 2.- Customers who have failed to pay their first EMI.- Physical verification status of the repossessed asset related to the loan.- Cases where Group suspects fraud and legal proceedings are initiated.

Historical PDs has been converted into forward looking PD which incorporates the forward looking economic outlook. Considering that major chunk ofborrowers in the retail portfolio is from rural area, Agriculture (real change % p.a.) is used as a macroeconomic variable. Agriculture (real change % p.a.)stands for Percentage change in real agricultural value-added, including livestock, forestry and fishing, over previous year). In case of SME and BillsDiscounting portfolio, Real GDP (% change pa) is used as the macroeconomic variable. The macroeconomic variables considered by the Group are robust reflections of the state of economy which result into systematic risk for the respectiveportfolio segments.Additionally, three different scenarios have been considered for ECL calculation. Along with the actual numbers (considered for Base case scenario), otherscenarios take care of the worsening as well as improving forward looking economic outlook. As at 31 March 2020, the probability assigned to base casescenario assumptions have been updated to reflect the rapidly evolving situation with respect to COVID-19. This includes an assessment of theeffectiveness of stimulus packages announced by government and regulatory measures imparted by RBI. These are considered in determining the lengthand severity of the forecast economic downturn. The Group's base case economic forecast scenarios reflects a deterioration in economic conditions in thefirst quarter with a gradual improvement thereafter. In addition to the base case forecast which reflects largely the negative economic consequences ofCOVID-19, greater weighting has been applied to the downside scenarios given the Group’s assessment of downside risks.


Assessment of significant increase in credit risk

The below table shows the values of the forward looking macro economic variable used in each of the scenarios for the ECL calculations. For this purpose,the Group has used the data source of Economist Intelligence Unit. The upside and downside % change has been derived using historical standard deviationfrom the base scenario based on previous 8 years change in the variable.

YearECL scenario for Macro Economic Variable

282



Rs. in lakhs


Inputs considered in the ECL model (Continued)(xi) Analysis of inputs to the ECL model of Residential Loan with respect to macro economic variable

Upside Base Downside% % %

Probability Assigned 10% 65% 25%Agriculture ( % real change p.a.) 2020 5.7 3.5 1.3

2021 5.4 3.2 1.02022 5.6 3.4 1.22023 5.5 3.3 1.12024 6.0 3.8 1.62025 5.3 3.1 0.92026 6.2 4.0 1.8

Subsequent Years 6.4 4.3 2.1

Impairment lossThe expected credit loss allowance provision for Retail Loans is determined as follows:

Rs. in lakhsPerforming Loans - 12

month ECLUnderperforming

loans - 'lifetime ECL not credit impaired'

Impaired loans - 'lifetime ECL credit

impairedTotal

Gross Balance as at 31 March 2020 52,79,319.57 6,16,208.94 5,48,449.65 64,43,978.16 Expected credit loss rate 1.02% 11.75% 28.31%Carrying amount as at 31 March 2020 (net of impairment provision) 52,25,486.64 5,43,814.52 3,93,173.26 61,62,474.43

Gross Balance as at 31 March 2019 49,72,868.77 5,17,380.10 3,83,898.47 58,74,147.34 Expected credit loss rate 1.03% 11.01% 16.81%Carrying amount as at 31 March 2019 (net of impairment provision) 49,21,882.98 4,60,420.12 3,19,347.75 57,01,650.84

The expected credit loss allowance provision for Residential Loans is determined as follows:Rs. in lakhs


Underperforming loans - 'lifetime ECL not credit impaired'


impairedTotal

Gross Balance as at 31 March 2020 5,51,885.04 1,64,783.15 1,27,721.16 8,44,389.35 Expected credit loss rate 1.04% 6.19% 32.45%Carrying amount as at 31 March 2020 (net of impairment provision) 5,46,159.15 1,54,578.84 86,270.01 7,87,008.00

Gross Balance as at 31 March 2019 5,39,528.34 1,60,582.65 1,04,763.77 8,04,874.76 Expected credit loss rate 0.93% 6.68% 19.32%Carrying amount as at 31 March 2019 (net of impairment provision) 5,34,536.73 1,49,860.84 84,527.33 7,68,924.90

ECL scenario for Macro Economic Variable Year


283



Rs. in lakhs


Impairment loss (Continued)The expected credit loss allowance provision for SME Loans including Bills of exchange is determined as follows:

Rs. in lakhsPerforming Loans - 12

month ECLUnderperforming

loans - 'lifetime ECL not credit impaired'


impairedTotal

Gross Balance as at 31 March 2020 2,12,459.79 7,849.04 19,298.01 2,39,606.84 Expected credit loss rate 0.23% 27.21% 82.00%Carrying amount as at 31 March 2020 (net of impairment provision) 2,11,968.51 5,713.58 3,474.14 2,21,156.24

Gross Balance as at 31 March 2019 2,28,685.38 3,247.19 17,655.41 2,49,587.98 Expected credit loss rate 0.12% 2.61% 38.96%Carrying amount as at 31 March 2019 (net of impairment provision) 2,28,405.73 3,162.59 10,776.65 2,42,344.98

The expected credit loss allowance provision for Trade Advances is determined as follows:Rs. in lakhs

Less than 60 days past due

61-90 days past due Credit impaired (more than 90 days)

Total

Gross Balance as at 31 March 2020 96,383.28 21,149.54 6,402.06 1,23,934.89 Expected credit loss rate 0.40% 6.77% 100.00%Carrying amount as at 31 March 2020 (net of impairment provision) 95,997.75 19,718.61 - 1,15,716.36

Gross Balance as at 31 March 2019 1,78,777.59 3,134.21 5,518.76 1,87,430.56 Expected credit loss rate 0.40% 7.33% 100.00%Carrying amount as at 31 March 2019 (net of impairment provision) 1,78,062.48 2,904.49 - 1,80,966.97

The expected credit loss allowance provision for Financial Investments measured at amortised cost is determined as follows:Rs. in lakhs


Underperforming loans - 'lifetime ECL not credit impaired'


impairedTotal

Gross Balance as at 31 March 2020 1,12,958.95 - - 1,12,958.95 Expected credit loss rate 0.12%Carrying amount as at 31 March 2020 (net of impairment provision) 1,12,822.76 1,12,822.76

Gross Balance as at 31 March 2019 1,20,477.05 - - 1,20,477.05 Expected credit loss rate 1.03%Carrying amount as at 31 March 2019 (net of impairment provision) 1,20,194.53 1,20,194.53

Level of Assessment - Aggregation CriteriaThe Group recognises the expected credit losses (ECL) on a collective basis that takes into account comprehensive credit risk information. Considering the economic and risk characteristics, pricing range, sector concentration, the Group calculates ECL on a collective basis for all stages - Stage 1, Stage 2 and Stage 3 assets.


284



Rs. in lakhs


An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to Retail Loans is, as follows :Gross exposure reconciliation

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2018 38,63,531.16 4,66,067.48 4,87,361.73 48,16,960.37 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 1,37,506.90 (1,04,222.42) (33,284.47) - - Transfers to Stage 2 (3,54,349.96) 3,80,486.46 (26,136.50) - - Transfers to Stage 3 (1,18,290.12) (70,194.12) 1,88,484.25 - - Loans that have been derecognised during the period (4,32,819.07) (75,231.15) (1,09,024.24) (6,17,074.46) New loans originated during the year 29,47,806.74 1,00,031.11 44,312.98 30,92,150.83 Write-offs (138.14) (1,198.79) (1,16,927.08) (1,18,264.01) Remeasurement of net exposure (10,70,378.74) (1,78,358.47) (50,888.18) (12,99,625.39)

Gross carrying amount balance as at 31 March 2019 49,72,868.77 5,17,380.10 3,83,898.47 58,74,147.34 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 1,36,418.58 (1,12,758.71) (23,659.87) - - Transfers to Stage 2 (5,15,583.82) 5,28,647.95 (13,064.13) - - Transfers to Stage 3 (1,97,300.63) (1,25,390.74) 3,22,691.37 - - Loans that have been derecognised during the period (4,89,909.75) (76,625.39) (82,173.29) (6,48,708.43) New loans originated during the year 26,86,576.49 79,956.70 26,066.66 27,92,599.85 Write-offs (1.86) (18.00) (33,598.54) (33,618.40) Remeasurement of net exposure (13,13,748.21) (1,94,982.97) (31,711.02) (15,40,442.20)

Gross carrying amount balance as at 31 March 2020 52,79,319.57 6,16,208.94 5,48,449.65 64,43,978.16

Reconciliation of ECL balanceRs. in lakhs

Particulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 48,600.95 74,547.72 1,59,267.36 2,82,416.03 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 27,547.63 (16,670.43) (10,877.20) - - Transfers to Stage 2 (4,457.51) 12,998.79 (8,541.28) - - Transfers to Stage 3 (1,488.02) (11,227.58) 12,715.60 - - Loans that have been derecognised during the period (5,444.61) (12,033.26) (35,628.57) (53,106.44) New loans originated during the year 30,222.17 11,012.74 13,263.87 54,498.78 Write-offs (1.74) (191.75) (88,849.18) (89,042.67) Net remeasurement of loss allowance (43,993.08) (1,476.25) 23,200.12 (22,269.21)

ECL allowance balance as at 31 March 2019 50,985.79 56,959.98 64,550.72 1,72,496.50 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 16,392.25 (12,413.96) (3,978.30) - - Transfers to Stage 2 (5,286.17) 7,482.85 (2,196.67) - - Transfers to Stage 3 (2,022.88) (13,804.66) 15,827.54 - - Loans that have been derecognised during the period (5,022.94) (8,435.93) (13,817.05) (27,275.92) New loans originated during the year 24,539.86 9,113.32 6,329.97 39,983.15 Write-offs (0.02) (1.98) (30,993.32) (30,995.32) Net remeasurement of loss allowance (25,752.95) 33,494.79 1,19,553.49 1,27,295.33

ECL allowance balance as at 31 March 2020 53,832.94 72,394.42 1,55,276.38 2,81,503.74

The contractual amount outstanding on financial assets that has been written off by the Group for Retail loans during the year ended 31 March 2020 andthat were still subject to enforcement activity was Rs 38,352.61 lakhs (31 March 2019 : Rs 1,18,264.00 lakhs ).The increase in ECL of the portfolio for Retail loans was driven by an increase in the gross size of the portfolio, movements between stages as a result of increases in credit risk and a deterioration in economic conditions, and management overlay of Rs 55,206 lakhs.


285



Rs. in lakhs


An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to Residential Loans is, as follows :Gross exposure reconciliation

Rs. in lakhsParticulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2018 3,96,317.92 1,48,862.22 86,036.74 6,31,216.88 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 34,825.74 (29,849.86) (4,975.88) - - Transfers to Stage 2 (54,642.54) 57,066.55 (2,424.01) - - Transfers to Stage 3 (14,821.78) (15,088.54) 29,910.32 - - Loans that have been derecognised during the period (20,266.82) (6,831.64) (5,834.03) (32,932.49) New loans originated during the year 1,88,354.81 16,415.03 171.36 2,04,941.20 Write-offs - - (6,119.10) (6,119.10) Remeasurement of net exposure 9,761.01 (9,991.11) 7,998.37 7,768.27

Gross carrying amount balance as at 31 March 2019 5,39,528.34 1,60,582.65 1,04,763.77 8,04,874.76 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 (89,415.09) 72,032.83 17,382.26 - - Transfers to Stage 2 23,434.31 (42,431.27) 18,996.96 - - Transfers to Stage 3 3,906.13 1,691.53 (5,597.66) - - Loans that have been derecognised during the period (25,629.75) (8,284.37) (6,545.96) (40,460.08) New loans originated during the year 1,48,298.06 7,061.38 104.61 1,55,464.05 Write-offs - - (8,676.93) (8,676.93) Remeasurement of net exposure (48,236.96) (25,869.60) 7,294.11 (66,812.45)

Gross carrying amount balance as at 31 March 2020 5,51,885.04 1,64,783.15 1,27,721.16 8,44,389.35

Reconciliation of ECL balance on Residential LoansRs. in lakhs

Particulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 2,617.86 13,212.91 15,134.44 30,965.21

- Transfers to Stage 1 3,651.33 (2,649.77) (1,001.56) - - Transfers to Stage 2 (362.54) 809.42 (446.88) - - Transfers to Stage 3 (98.72) (1,339.41) 1,438.13 - - Loans that have been derecognised during the period (122.62) (604.92) (1,541.74) (2,269.28) New loans originated during the year 1,758.29 1,096.00 24.45 2,878.74 Write-offs - - (853.39) (853.39) Net remeasurement of loss allowance (2,451.99) 197.58 7,482.99 5,228.58

ECL allowance balance as at 31 March 2019 4,991.61 10,721.81 20,236.44 35,949.86 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 (891.81) 708.88 182.93 - - Transfers to Stage 2 1,564.67 (2,833.06) 1,268.39 - - Transfers to Stage 3 824.83 374.37 (1,199.20) - - Loans that have been derecognised during the period (211.28) (553.13) (1,928.60) (2,693.01) New loans originated during the year 1,469.75 436.65 60.25 1,966.65 Write-offs - - (1,264.61) (1,264.61) Net remeasurement of loss allowance (2,021.88) 1,348.79 24,095.56 23,422.47

ECL allowance balance as at 31 March 2020 5,725.89 10,204.31 41,451.16 57,381.36

The increase in ECL of the portfolio for Residential loans was driven by an increase in the gross size of the portfolio, movements between stages as a result of increases in credit risk and a deterioration in economic conditions, and management overlay of Rs 15,451.93 lakhs.

The contractual amount outstanding on financial assets that have been written off for Residential Loans during the year ended 31 March 2020 and were still subject to enforcement activity was Rs. 3,767.25 Lakhs Lakhs (31 March 2019 : Rs. 2,835.64 Lakhs)


286



Rs. in lakhs


Gross exposure reconciliationRs. in lakhs

Particulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2018 1,73,745.46 5,775.43 11,560.77 1,91,081.66 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 4,801.12 (2,331.50) (2,469.61) - - Transfers to Stage 2 (385.03) 390.68 (5.65) 0.00 - Transfers to Stage 3 (6,576.32) (1,451.36) 8,027.68 - - Loans that have been derecognised during the period (57,140.10) (999.69) (655.30) (58,795.09) New loans originated during the year 1,94,780.53 2,916.76 5,613.06 2,03,310.35 Write-offs (163.80) (685.88) (3,324.28) (4,173.97) Net remeasurement of exposure (80,376.47) (367.25) (1,091.26) (81,834.98)

Gross carrying amount balance as at 31 March 2019 2,28,685.38 3,247.19 17,655.41 2,49,587.98 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 4,636.64 (1,512.78) (3,123.86) - - Transfers to Stage 2 (5,961.16) 6,210.80 (249.64) (0.00) - Transfers to Stage 3 (3,218.85) (556.88) 3,775.73 - - Loans that have been derecognised during the period (98,112.98) (1,181.89) (2,599.30) (1,01,894.17) New loans originated during the year 1,76,770.61 4,499.39 5,018.60 1,86,288.60 Write-offs - - - - Net remeasurement of exposure (90,339.85) (2,856.78) (1,178.94) (94,375.57)

Gross carrying amount balance as at 31 March 2020 2,12,459.79 7,849.04 19,298.01 2,39,606.84


Particulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 3,078.96 449.99 6,876.35 10,405.29 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 2,085.40 (191.27) (1,894.12) - - Transfers to Stage 2 (7.86) 9.07 (1.21) - - Transfers to Stage 3 (148.56) (154.92) 303.48 - - Loans that have been derecognised during the period 5.79 (32.16) (435.44) (461.80) New loans originated during the year 181.34 72.21 3,067.73 3,321.29 Write-offs (0.01) (42.60) (2,025.69) (2,068.29) Net remeasurement of loss allowance (4,915.42) (25.72) 987.66 (3,953.48)

ECL allowance balance as at 31 March 2019 279.65 84.59 6,878.76 7,243.00 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 1,649.55 (40.53) (1,609.02) - - Transfers to Stage 2 (1.08) 137.06 (135.98) - - Transfers to Stage 3 (6.54) (17.10) 23.64 - - Loans that have been derecognised during the period (41.44) (25.78) (726.64) (793.86) New loans originated during the year 256.85 50.52 4,039.87 4,347.25 Write-offs - - - - Net remeasurement of loss allowance (1,645.73) 1,946.69 7,353.24 7,654.20

ECL allowance balance as at 31 March 2020 491.26 2,135.46 15,823.87 18,450.59

The contractual amount outstanding on financial assets that has been written off for the SME loans during the year ended 31 March 2020 and that were stillsubject to enforcement activity was nil (31 March 2019 :Rs 4,051.38 lakhs).The increase in ECL of the portfolio was driven by movements between stages as a result of increases in credit risk and a deterioration in economicconditions and management overlay of Rs 2195.05 lakhs.


An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to SME Loans including Bills of exchange is, as follows :

287



Rs. in lakhs



Particulars Stage 1 Stage 2 Stage 3 TotalOpening balance of outstanding exposure as at 1 April 2018 1,95,712.59 6,184.95 225.87 2,02,123.41 New Exposures 96,099.05 901.12 1.94 97,002.11 Exposure derecognised or matured/ lapsed ( excluding write-offs) (1,93,695.97) (6,075.04) (189.32) (1,99,960.33) - Transfers to Stage 1 74.69 (74.49) (0.20) 0.00 - Transfers to Stage 2 (261.64) 261.64 - - - Transfers to Stage 3 (6.38) (6.92) 13.30 - Write-offs - - - - Net remeasurement of exposure (1,248.18) (187.84) - (1,436.02) Gross carrying amount balance as at 31 March 2019 96,674.16 1,003.42 51.59 97,729.17 Changes due to loans recognised in the opening balance that have:New Exposures 64,786.82 328.82 0.60 65,116.24 Exposure derecognised or matured/ lapsed ( excluding write-offs) (94,233.67) (992.57) (51.59) (95,277.83) - Transfers to Stage 1 (114.15) 114.15 - - - Transfers to Stage 2 8.21 (8.21) - - - Transfers to Stage 3 - - - - Write-offs - - - - Net remeasurement of exposure (1,572.04) (68.60) - (1,640.64) Gross carrying amount balance as at 31 March 2020 65,549.33 377.01 0.60 65,926.94

Reconciliation of ECL balance on loan commitmentsRs. in lakhs

Particulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 1,831.55 549.04 39.22 2,419.81 New Exposures 834.51 60.17 0.37 895.05 Exposure derecognised or matured/ lapsed ( excluding write-offs) (1,106.36) - - (1,106.36) - Transfers to Stage 1 6.65 (6.61) (0.04) - - Transfers to Stage 2 (1.75) 1.75 - - - Transfers to Stage 3 (0.04) (0.61) 0.65 - - Loans that have been derecognised during the period (711.75) (539.28) (32.87) (1,283.90) Net remeasurement of loss allowance (15.27) 2.54 10.02 (2.71)

ECL allowance balance as at 31 March 2019 837.54 67.00 17.35 921.89 Changes due to loans recognised in the opening balance that have:New Exposures 466.99 20.36 0.19 487.54 Exposure derecognised or matured/ lapsed ( excluding write-offs) (279.09) - - (279.09) - Transfers to Stage 1 (0.78) 0.78 - - - Transfers to Stage 2 0.55 (0.55) - - - Transfers to Stage 3 - - - - - Loans that have been derecognised during the period (544.93) (66.27) (17.35) (628.55) Net remeasurement of loss allowance (10.39) 2.03 - (8.36) ECL allowance balance as at 31 March 2020 469.89 23.35 0.19 493.43


The increase in ECL of the portfolio was driven by an increase in the size of the portfolio, movements between stages as a result of increases in credit riskand due to deterioration in economic conditions.

An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to other undrawn commitments of Retail and Residential loans is, as follows :

288



Rs. in lakhs



Particulars Stage 1 Stage 2 Stage 3 TotalGross carrying amount balance as at 1 April 2018 2,04,843.85 - - 2,04,843.85 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognised during the period (58,415.02) - - (58,415.02) New Investments originated during the year 31,115.10 - - 31,115.10 Write-offs - - - Net remeasurement of same stage continuing investments (57,066.88) - - (57,066.88)

Gross carrying amount balance as at 31 March 2019 1,20,477.05 - - 1,20,477.05 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognised during the period (50,107.82) - - (50,107.82) New Investments originated during the year 43,494.80 - - 43,494.80 Write-offs - - - Net remeasurement of same stage continuing investments (905.08) - - (905.08)

Gross carrying amount balance as at 31 March 2020 1,12,958.95 - - 1,12,958.95


Particulars Stage 1 Stage 2 Stage 3 TotalECL allowance balance as at 1 April 2018 1,299.20 - - 1,299.20 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognised during the period (330.19) - - (330.19) New Investments originated during the year 88.31 - - 88.31 Write-offs - - - Net remeasurement of loss allowance (774.80) - - (774.80)

ECL allowance balance as at 31 March 2019 282.52 - - 282.52 Changes due to loans recognised in the opening balance that have:- Transfers to Stage 1 - - - - - Transfers to Stage 2 - - - - - Transfers to Stage 3 - - - - - Investments that have been derecognised during the period (245.20) - - (245.20) New Investments originated during the year 108.26 - - 108.26 Write-offs - - - Net remeasurement of loss allowance (9.38) - - (9.38)

ECL allowance balance as at 31 March 2020 136.19 - - 136.19

Significant changes in the gross carrying value that contributed to change in loss allowanceThe Group mostly provide loans to retail individual customers in Rural and Semi urban area which is of small ticket size. Change in any single customerrepayment will not impact significantly to companies provisioning. All customers are being monitored based on past due and corrective actions are takenaccordingly to limit the companies risk.

An analysis of changes in the gross carrying amount and the corresponding ECLs in relation to Financial Investments measured at amortised costis, as follows :


The contractual amount outstanding on financial investments that has been written off in relation to the financial investments during the year ended 31March 2020 and that were still subject to enforcement activity was nil (31 March 2019 : nil).The decrease in ECL of the portfolio was on account of decrease in the size of the portfolio.

289



Rs. in lakhs


Concentration of Credit Risk - Retail and Residential Loans

Rs. in lakhsParticulars As at 31 March 2020 As at 31 March 2019Concentration by Geographical region in India:North 20,05,106.00 27,68,106.85 East 17,43,746.02 9,29,341.66 West 22,37,354.15 19,10,172.12 South 16,65,803.07 15,08,520.01 Total Carrying Value as at reporting period 76,52,009.24 71,16,140.64

Maximum Exposure to credit Risk

Narrative Description of CollateralCollateral primarily include vehicles purchased by retail loan customers, residential property in case of housing loan and machinery & property in case ofSME customers. The financial investments are secured by way of a first ranking pari-passu and charge created by way of hypothecation on the receivablesof the other company.

The maximum exposure to credit risk of loans and investment securities is their carrying amount. The maximum exposure is before considering both theeffect of mitigation through collateral.

Group's loan portfolio is predominantly to finance retail automobile and home loans. The Group manages concentration of risk primarily by geographicalregion in India. The following tables show the geographical concentrations of trade advances and financial loans as at year end:


290



Quantitative Information of Collateral - Credit Impaired assets (Retail and SME Loans)

Gross value of total secured loans to value of collateralRs. in lakhs

Loan To Value

31 March 2020 31 March 2019 31 March 2020 31 March 2019Upto 50% 5,77,139.99 5,67,301.57 72,323.46 64,170.17 51 - 70% 10,42,245.97 8,62,247.22 14,520.50 13,990.99 71 - 100% 38,50,486.32 32,56,690.19 7,278.30 4,988.59 Above 100% 9,46,203.13 11,78,033.03 23,011.94 33,898.27

64,16,075.41 58,64,272.01 1,17,134.21 1,17,048.03

Gross value of credit impaired loans to value of collateralRs. in lakhs

Loan To Value

31 March 2020 31 March 2019 31 March 2020 31 March 2019Upto 50% 12405.55 123005.62 9528.06 7820.9851 - 70% 14099.09 98687.85 1046.17 1009.7171 - 100% 40597.81 108463.11 771.73 1889.09Above 100% 481347.20 53741.69 7952.04 6935.62

548449.65 383898.27 19298.01 17655.40

Quantitative Information of Collateral - Credit Impaired assets (Residential Loans)The value of the collateral for residential housing loans is typically based on the collateral value at origination.Gross value of total loans to value of collateral

Rs. in lakhs

31 March 2020 31 March 2019Upto 50% 3,26,461.95 3,17,060.81 51 - 70% 3,59,923.89 3,43,534.80 71 - 100% 1,57,888.43 1,44,157.14 Above 100% - -

8,44,274.27 8,04,752.75

Loan commitments to value of collateral

31 March 2020 31 March 2019

Upto 50% 17,755.64 29,891.08 51 - 70% 2,899.39 6,077.53 71 - 100% 1,793.23 3,613.08 Above 100% - -

22,448.26 39,581.68

Gross value of credit impaired loans to value of collateralRs. in lakhs

31 March 2020 31 March 2019Upto 50% 42,500.99 36,175.56 51 - 70% 57,917.14 44,611.02 71 - 100% 27,290.87 23,963.25 Above 100% - -

1,27,708.99 1,04,749.83

Loan To Value

Loan To Value


Rs. in lakhs

The Company monitors its exposure to loan portfolio using the Loan To Value (LTV) ratio, which is calculated as the ratio of the gross amount of the loan to the valueof the collateral. The value of the collateral for Retail loans is derived by writing down the asset cost at origination by 20% p.a. on reducing balance basis. And the valueof the collateral of Stage 3 Retail loans is based on the Indian Blue Book value for the particular asset. The value of collateral of SME loans is based on fair market valueof the collaterals held.

Gross Value of loans in stage 3

Gross Value of total residential loans

Gross Value of Retail loans in stage 3

Gross Value of Secured Retail loans

Gross Value of SME loans in stage 3

Gross Value of Secured SME loans


Loan To Value Gross Value of commitments

291



Quantitative Information of Collateral - Credit Impaired assets (for Retail and SME Loans)

Rs. in lakhs

31-Mar-20 Maximum exposure to Credit Risk


Land and Building

Book Debts, Inventory and other

Working Capital items

Surplus Collateral


Retail Loans 5,48,449.65 3,80,919.96 - - - (54,736.61) 3,26,183.35 2,22,266.30 1,55,276.38

SME Loans 19,298.01 3,762.00 10,206.56 24,663.58 1,202.50 (27,081.55) 12,753.09 6,544.92 15,823.87



Land and Building



Surplus Collateral


Retail Loans 3,83,898.47 2,69,751.57 - - - (33,156.49) 2,36,595.08 1,47,303.39 64,550.72 SME Loans 17,655.41 2,110.00 9,393.69 17,066.17 - (17,643.57) 10,926.29 6,729.12 6,878.76

Quantitative Information of Collateral - Credit Impaired assets (for Residential Loans)

Rs. in lakhs



Land and Building



Surplus Collateral


Loans against assets 1,27,709.15 3,51,686.04 (2,26,513.05) 1,25,172.99 2,536.16 41,439.14 Others 12.01 - - - - - - 12.01 12.01



Land and Building



Surplus Collateral


Loans against assets 1,04,749.71 - - 1,98,088.82 - (95,234.47) 1,02,854.35 1,895.36 20,235.22 Others 14.06 - - - - - - 14.06 1.22


The below tables provide an analysis of the current fair values of collateral held for stage 3 assets. The value of collateral has not been considered while recognising theloss allowances.

Fair value of collateral held against Credit Impaired assets

The below tables provide an analysis of the current fair values of collateral held for stage 3 assets. The value of collateral has not been considered while recognising theloss allowances.

Fair value of collateral held against Credit Impaired assets


292


5050.3 Liquidity Risk Management

a) Maturity profile of non-derivative financial liabilities

Rs. In lakhsLess than 1 Year 1-3 Years 3 Years to 5 Years 5 years and above

INR INR INR INRNon-derivative financial liabilities31-Mar-20Trade Payable : 72,284.70 - - - Debt Securities :- Principal 7,03,050.00 4,96,520.83 3,15,356.11 4,65,675.30 - Interest 1,62,198.06 2,75,134.71 1,30,306.61 1,53,914.98 Borrowings (Other than Debt Securities) :- Principal 12,46,637.21 18,90,984.36 2,25,275.05 - - Interest 2,04,326.92 1,74,015.09 14,934.04 - Deposit :- Principal 1,66,223.58 6,07,810.66 1,08,286.07 - - Interest 53,243.82 1,12,022.19 39,617.29 - Subordinated liabilities :- Principal 27,220.00 22,515.78 42,445.96 2,93,808.62 - Interest 34,334.62 62,181.96 63,084.88 1,05,008.38 Other financial liabilities : 1,81,213.70 69,572.39 8,929.93 41,610.04

Total 28,50,732.60 37,10,757.96 9,48,235.94 10,60,017.32

31-Mar-19Trade Payable : 1,14,848.13 - - - Debt Securities :- Principal 10,67,438.45 8,82,286.12 2,38,596.94 2,90,925.30 - Interest 1,49,997.10 1,84,187.12 88,372.26 76,906.37 Borrowings (Other than Debt Securities) :- Principal 9,11,010.74 13,31,032.54 2,23,931.56 - - Interest 1,75,313.92 1,63,692.68 10,059.01 - Deposit :- Principal 1,36,237.00 3,65,323.25 64,702.42 - - Interest 33,738.30 77,907.59 18,944.05 - Subordinated liabilities :- Principal 14,500.00 42,735.78 21,013.72 3,07,540.86 - Interest 31,553.86 63,619.41 56,851.84 1,30,622.06 Other financial liabilities : 1,90,603.14 28,054.83 1,607.48 750.98

Total 28,25,240.65 31,38,839.33 7,24,079.28 8,06,745.57

Particulars


Rs. in lakhs

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established Asset and Liability ManagementCommittee (ALCO) for the management of the Company’s short, medium and long-term funding and liquidity management requirements. TheCompany manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoringforecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The holding company also provides credit lines toits subsidiaries as and when necessary.

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. Theamount disclosed in the tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which theCompany can be required to pay. The tables include both interest and principal cash flows.To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period. Thecontractual maturity is based on the earliest date on which the Company may be required to pay.


293


50



50.3 Liquidity Risk Management (Continued)b) Maturity profile of derivative financial liabilities

Rs. In lakhsLess than 1 Year 1-3 Years 3 Years to 5 Years 5 years and above

INR INR INR INRDerivative financial instruments31-Mar-20Gross settled:Foreign exchange forward contracts- Payable 18.21 2,791.47 - - - Receivable 61.79 2,595.34 - - Interest Rate swaps- Payable - 1,468.82 - - - Receivable - - - - Currency swaps- Payable - - - - - Receivable 692.75 6,276.99 - - Total 772.75 13,132.62 - -

31-Mar-19Gross settled:Foreign exchange forward contracts- Payable 13.62 2,564.11 - - - Receivable 963.09 - - - Interest Rate swaps- Payable - 32.52 - - - Receivable - 90.93 - - Currency swaps- Payable - 5,090.76 - - - Receivable - - - - Total 976.71 7,778.32 - -

The following table details the Company’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on theundiscounted gross inflows and outflows on those derivatives that require gross settlement. There is no derivative instruments that is settled on a netbasis. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates asillustrated by the yield curves at the end of the reporting period.Particulars

294


5050.4 a) Financial Instruments regularly measured using Fair Value - recurring items

Rs. in lakhsFinancial assets/ financial liabilities Fair value

hierarchyValuation technique(s)

Key inputsFinancial assets / financial liabilities

Category As at 31 March 2020

As at 31 March 2019

1) Foreign currency forwards, Interest rate swaps & commodity derivatives

Financial Assets / (Liabilities)

Financial Instruments measured at FVTPL / FVOCI

(1,693.03) (1,258.33) Level 2 Discounted Cash Flow

Future cash flows are estimated based on forward exchangerates (from observable forward exchange rates at the end ofthe reporting period) and contract forward rates, discountedat a rate that reflects the credit risk of various counter parties.

2) Currency options Financial Assets / (Liabilities)


6,969.74 (5,437.81) Level 2 Black Scholes valuation model

Strike rate, spot rate, time to maturity, volatility and risk freeinterest rate

3) Investment in Mutual Funds Financial Assets Financial instrument measured at FVTPL

3,39,750.56 63,412.45 Level 1 Quoted market price



9.60 9.60 Level 3 Cost



2,891.83 1,154.65 Level 3 The discounted cash flow method used the future free cashflows of the company discounted by firm's WACC plus a riskfactor measured by beta, to arrive at the present value. Thekey inputs includes projection of financial statements (keyvalue driving factors), the cost of capital to discount theprojected cash flows.

6) Investment in convertible debentures Financial Assets Financial instrument measured at FVOCI

- 1,088.52 Level 3

7) Investment in Bonds and Govt securities.


24,776.37 - Level 1 Quoted market price

8) Investment in Other financial instruments -CP, CD

Financial Assets Financial instrument measured at FVTPL

- 1,05,980.47 Level 1 Quoted market price

The company doesn’t carry any financial asset or liability which it fair values on a non recurring basis.

Discounted Cash Flow

Terminal growth rate, Weighted average cost of capital.

Increase or decrease in multiple will result in increase or decrease in valuation.

Significant unobservable input(s) for level 3 hierarchy

Relationship of unobservable inputs to

fair value and sensitivity

Fair Value

Rs. in lakhs



295


5050.4 b) Reconciliation of Level 3 fair value measurements of financial instruments measured at fair value

Rs in lakhsParticulars Unquoted Equity

investment Convertible debentures

Bonds Govt Securities Total31 March 2020 Opening balance 1,164.25 1,088.52 2,252.77 Total gains or losses recognised: In Profit or loss a) in profit or loss b) in other comprehensive income 278.20 - 332.94 424.60 1,035.74 Fair value of - Purchases made during the year 1,458.98 - 10,141.82 13,877.01 25,477.81 Issues made during the year - Disposals made during the year (1,088.52) - - (1,088.52) Transfers into Level 3 - Transfers out of Level 3 Closing balance 2,901.43 - 10,474.76 14,301.61 27,677.80

31 March 2019 Opening balance 709.60 - 709.60 Total gains or losses recognised: In Profit or loss a) in profit or loss b) in other comprehensive income 454.65 788.52 1,243.17 Fair value of - Purchases made during the year 300.00 300.00 Transfers into Level 3 Transfers out of Level 3 Closing balance 1,164.25 1,088.52 2,252.77

Rs in lakhs31 March 2020 31 March 2019

Equity investment in Smartshift Logistic Solutions Private Limited (formerly Known as Orizonte Business Solutions Limited) #

Fair Value of Investments 1,673.30 1,154.65 Dividend income on investments held Equity investment in MF Utilities Limited 9.60 9.60 Equity investment in AAPCA Demystifying Data Technologies Private Limited

Fair Value of Investments 1,218.53 Dividend income on investments held - -

There are no disposal of investment during the year ended 31 March 2020 and 2019 respectively.

The Company has made the below equity investments neither for the purpose of trading nor for the purpose of acquiring. And accordingly, the investment has been classified in other comprehensive income as per Ind AS 109.5.7.5.

# Including investment of Rs.311.98 lakhs in Compulsorily Convertible Cumulative Participating Preference Shares (CCCPS) of SmartshiftLogistics Solutions Private Limited.


Rs. in lakhs

c) Equity Investments designated at Fair value through Other Comprehensive Income


296



Rs. in lakhs50

d) Financial Instruments measured at amortised costRs in lakhs

Fair valueLevel 1 Level 2 Level 3

As at 31 March 2020Financial assets

a) Cash and cash equivalent 78,260.23 78,260.23 78,260.23 - - b) Bank balances other than cash and cash equivalent 74,899.44 74,899.44 74,899.44 - - c) Trade Receivables 5,291.06 5,291.06 - 5,291.06 - d) Loans and advances to customers 72,86,378.45 72,72,814.74 - 23.41 72,72,791.33 e) Financial investments - at amortised cost 1,12,822.76 1,20,367.53 1,05,594.07 14,773.46 - f) Other financial assets 51,978.71 53,087.29 - 53,087.29 -

Total 76,09,630.65 76,04,720.29 2,58,753.74 73,175.22 72,72,791.33 Financial liabilities

a) Trade Payables 72,284.70 72,284.70 - 72,284.70 - b) Debt securities 19,74,461.07 20,91,655.09 20,91,655.09 - - c) Borrowings other than debt securities 33,32,713.60 32,67,951.36 - 32,67,951.36 - d) Deposits 8,78,138.98 9,06,469.36 - 9,06,469.36 - e) Subordinated Liabilities 3,78,110.37 4,17,554.04 4,17,554.04 - - f) Other financial liability 2,99,417.34 2,99,643.24 - 2,99,643.24 -

Total 69,35,126.06 70,55,557.79 25,09,209.12 45,46,348.67 -

As at 31 March 2019Financial assets

a) Cash and cash equivalent 53,722.32 53,722.32 51,513.31 2,209.01 - b) Bank balances other than cash and cash equivalent 45,681.43 45,681.43 45,681.43 - - c) Trade Receivables 5,360.31 5,360.31 - 5,360.31 - d) Loans and advances to customers 68,93,899.97 68,53,299.11 - 12.27 68,53,286.84 e) Financial investments - at amortised cost 1,20,194.53 1,23,733.97 74,461.59 49,272.38 - f) Other financial assets 21,207.08 21,207.08 - 20,891.98 315.10

Total 71,40,065.64 71,03,004.23 1,71,656.33 77,745.95 68,53,601.94 Financial liabilities

a) Trade Payables 1,14,848.13 1,14,848.12 - 1,14,848.12 - b) Debt securities 24,71,588.50 24,85,498.99 21,83,851.37 3,01,647.62 - c) Borrowings other than debt securities 24,63,272.12 24,40,025.99 - 24,40,025.99 - d) Deposits 5,63,093.41 5,78,519.94 - 5,78,519.94 - e) Subordinated Liabilities 3,82,208.09 4,08,010.05 4,08,010.05 - - f) Other financial liability 2,84,074.55 2,84,074.55 - 2,84,074.55 -

Total 62,79,084.80 63,10,977.64 25,91,861.42 37,19,116.22 -

Valuation methodologies of financial instruments not measured at fair value

Short-term financial assets and liabilities


Particulars Carrying Value Fair value

There were no transfers between Level 1 and Level 2 during the year.

Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded andmeasured at fair value in the company's financial statements. The valuation models the Company uses to value financial instruments employonly observable market data as inputs. This has not changed as a result of COVID-19. These fair values were calculated for disclosure purposesonly.

For financial assets and financial liabilities that have a short-term maturity (less than twelve months), the carrying amounts, which are net ofimpairment, are a reasonable approximation of their fair value. Such instruments include: cash and balances, trade receivables, balances otherthan cash and cash equivalents, trade payables and investment & borrowings in commercial papers. Such amounts have been classified asLevel 2 on the basis that no adjustments have been made to the balances in the balance sheet.

297



Rs. in lakhs50

d) Financial Instruments measured at amortised cost (Continued)Loans and advances to customers

Financial Investments

Issued debt

Deposits from public


Except for the above, carrying value of other financial assets/liabilities represent reasonable estimate of fair value.

The fair value of deposits received from public is estimated by discounting the future cash flows considering the interest rate applicable on thereporting date for that class of deposits segregated by their tenure and cumulative/ non-cumulative scheme.

The fair value of issued debt is estimated by a discounted cash flow model incorporating interest rate estimates from market-observable datasuch as secondary prices for its traded debt itself.

For Government Securities, the market value of the respective Government Stock as on date of reporting has been considered for fair valuecomputations. And since market quotes are not available in the absence of any trades, the carrying amount of Secured redeemable non-convertible debentures is considered as the fair value.

The fair values of loans and receivables are calculated using a portfolio-based approach, grouping loans as far as possible into homogenousgroups based on similar characteristics. The fair value is then extrapolated to the portfolio using discounted cash flow models that incorporateinterest rate estimates considering all significant characteristics of the loans. This fair value is then reduced by impairment allowance which isalready calculated incorporating probability of defaults and loss given defaults to arrive at fair value net of risk.

298


51 Maturity analysis of assets and liabilities

Rs. in lakhsAssets Within 12

months After 12

months Total Within 12

months After 12 months Total

Cash and cash equivalents 78,260.23 - 78,260.23 53,722.32 - 53,722.32 Bank balance 74,899.44 - 74,899.44 45,681.43 - 45,681.43 Derivative financial instruments 707.37 8,585.39 9,292.76 1,006.39 - 1,006.39 Trade receivables 5,291.06 - 5,291.06 5,360.31 - 5,360.31 Loans 27,41,259.22 45,45,119.23 72,86,378.45 29,18,008.12 39,75,891.85 68,93,899.97 Investments 3,51,136.66 1,82,899.12 5,34,035.78 2,19,340.52 1,13,394.78 3,32,735.30 Other financial assets 12,233.58 39,745.13 51,978.71 9,847.33 11,359.75 21,207.08 Current tax assets (Net) - 25,783.00 25,783.00 - 31,212.81 31,212.81 Deferred tax Assets (Net) - 57,883.42 57,883.42 - 44,969.75 44,969.75 Property, plant and equipment - 42,775.57 42,775.57 - 16,818.54 16,818.54 Intangible assets under development - 55.68 55.68 - 79.41 79.41 Other Intangible assets - 2,760.26 2,760.26 - 3,326.44 3,326.44 Other non-financial assets 7,211.65 2,651.80 9,863.45 5,680.86 1,896.30 7,577.16

- - Total Assets 32,70,999.21 49,08,258.60 81,79,257.81 32,58,647.28 41,98,949.63 74,57,596.91 - Liabilities

Financial Liabilities - - Derivative financial instruments 17.77 3,998.29 4,016.06 45.20 7,657.33 7,702.53 Trade Payables - - i) total outstanding dues of micro enterprises and small enterprises

25.61 - 25.61 23.72 - 23.72 ii) total outstanding dues of creditors other than micro enterprises and small enterprises

69,297.22 - 69,297.22 1,11,406.58 - 1,11,406.58

Other Payablesi) total outstanding dues of micro enterprises and small enterprises

17.40 - 17.40 253.29 - 253.29


2,944.47 - 2,944.47 3,164.54 - 3,164.54

Debt Securities 7,00,321.63 12,74,139.44 19,74,461.07 10,64,227.59 14,07,360.91 24,71,588.50 Borrowings (Other than Debt Securities) 12,29,446.47 21,03,267.13 33,32,713.60 9,10,891.98 15,52,380.14 24,63,272.12 Deposits 1,65,438.58 7,12,700.40 8,78,138.98 1,35,470.74 4,27,622.67 5,63,093.41 Subordinated Liabilities 27,146.48 3,50,963.89 3,78,110.37 14,362.52 3,67,845.57 3,82,208.09 Other financial liabilities 1,79,303.98 1,20,113.36 2,99,417.34 1,79,305.10 1,04,769.45 2,84,074.55 Non-Financial LiabilitiesCurrent tax liabilities (Net) 1,737.93 - 1,737.93 1,392.09 - 1,392.09 Provisions 10,216.34 10,922.65 21,138.99 15,807.19 9,686.74 25,493.93 Other non-financial liabilities 10,124.89 1,245.21 11,370.10 7,617.16 1,553.69 9,170.85 Total Liabilities 23,96,038.77 45,77,350.37 69,73,389.14 24,43,967.70 38,78,876.50 63,22,844.20 Net 8,74,960.44 3,30,908.23 12,05,868.67 8,14,679.58 3,20,073.13 11,34,752.71

Other undrawn commitments 67,503.24 - 67,503.24 98,493.38 - 98,493.38 Total commitments 67,503.24 - 67,503.24 98,493.38 - 98,493.38


Rs. in lakhs

31 March 2020 31 March 2019

The table below shows the maturity analysis of assets and liabilities according to when they are expected to be recovered or settled.

299


52i)

a) Holding Company Mahindra & Mahindra Limited

b) Fellow Subsidiaries :Mahindra USA, IncNBS International LimitedMahindra First Choice Wheels LimitedMahindra Defence Systems Ltd.Mahindra Retail Private LimitedMahindra Integrated Business Solutions Ltd.Mahindra Vehicle Manufacturers LimitedMahindra Construction Co. Ltd.Bristlecone India LimitedMahindra Water Utilities LimitedMahindra Engineering & Chemical Products LtdMahindra Holidays & Resorts India LimitedGromax Agri Equipment LimitedMahindra First Choice Services LimitedMahindra Agri Solutions LimitedMahindra Logistics LimitedMahindra Intertrade LimitedNew Democratic Electoral Trust

c) Joint Venture(s) / Associate(s): Mahindra Finance USA, Inc(entities on whom control is exercised) Ideal Finance Ltd

d) Joint Venture(s) / Associate(s) of Holding Company: Tech Mahindra LimitedSwaraj Engines Ltd

Mahindra Summit Agriscience LtdPSL Media & Communications Ltd

e) Key Management Personnel:(where there are transactions) Mr. V Ravi (Executive Director & Chief Financial Officer)

Mr. Dhananjay Mungale (Chairman & Independent Director)Mr. C. B. Bhave (Independent Director)Ms. Rama Bijapurkar (Independent Director)Mr. Milind Sarwate (Independent Director)Mr. Arvind Sonde (Independent Director)Mr. V. S. Parthasarthy (Director)

f) Relatives of Key Management Personnel Ms. Janaki Iyer(where there are transactions) Ms. Ramlaxmi Iyer

Mr. Risheek IyerMs. Girija SubramaniumMs. Prema MahadevanMs. Sudha BhaveMr. V MuraliMs. Srilatha RaviMr. Siddharth RaviMs. Asha Ramaswamy

Mr. Ramesh Iyer (Vice-Chairman & Managing Director)




Rs. in

Related party disclosures:As per Ind AS 24 on 'Related party disclosures', the related parties of the Company are as follows:

Smartshift Logistics Solutions Pvt. Ltd. (Formerly known as Resfeber Labs PrivateLimited)

300


52 Related party disclosures: (Continued)ii) The nature and volume of transactions of the Company during the year with above related parties were as follows:

Rs. in lakhs











Loan income- Smartshift Logistics Solutions Pvt Ltd. 306.59

Subvention / Disposal loss income- Mahindra & Mahindra Limited 2,310.08 5,848.41 - - - - Gromax Agri Equipment Limited - 9.24 - - -

Lease rental income- Mahindra & Mahindra Limited 607.29

Interest income- NBS International Limited - 0.66 - - - - Mahindra First Choice Services Limited - 9.68

Interest expense- Mahindra & Mahindra Limited 3,220.84 3,881.52 - - - - Swaraj Engines Limited 140.75 87.77 - Tech Mahindra Limited 2,470.19 2,582.45 - - - - Mahindra Vehicle Manufacturers Limited 504.00 737.79 - Mahindra Intertrade Limited 96.10 35.12 - Mahindra Water Utilities Limited 68.18 2.20 -Mahindra Holidays and Resorts India Limited 70.24 -Mahindra Logistics Limited 115.42 - Mahindra First Choice Wheels Ltd. 248.32 - Mahindra Engineering & Chemical Products Ltd 1.16 - PSL Media & Communications Ltd 6.63 - Mr. Ramesh Iyer - - 7.16 4.28 - - Mr. V Ravi 6.36 0.07 - Mr. C. B. Bhave 6.33 3.97 - Others 0.67 - - 32.84 19.71

Other expenses- Mahindra & Mahindra Limited 2,522.63 3,106.59 - - - - - - Mahindra First Choice Wheels Limited 1,531.02 1,402.17 - - - - Bristlecone India Limited 103.66 - - Mahindra Vehicle Manufacturers Limited 70.49 124.38 - - - - NBS International Limited 70.14 - - Mahindra USA, Inc - 188.00 - - - - Mahindra Integrated Business Solutions Limited 2,954.48 1,561.33 - - - - Mahindra Holidays and Resorts India Limited 0.08 - - Mahindra Retail Pvt Limited 750.25 703.04 - Others 91.32 206.32 - - -

Relatives of Key Management Personnel


Rs. in lakhs

Particulars Holding Company Fellow Subsidiaries / Joint Ventures / Associates of Holding Company

Joint Venture(s) / Associate(s) Key Management Personnel

Notes to Consolidated Financial Statements (Continued)

301


52 Related party disclosures: (Continued)


Rs. in lakhs


ii) The nature and volume of transactions of the Company during the year with above related parties were as follows: (Continued)Rs. in lakhs











Donations- National Democratic Electoral Trust 600.00 240.00 Remuneration- Mr. Ramesh Iyer 655.94 715.72 - Mr. V Ravi 337.50 281.77 Reimbursement from parties- Mahindra & Mahindra Limited 170.15 - - - - Gromax Agri Equipment Limited - - 58.86 - Reimbursement to parties- Mahindra USA, Inc 259.41 - Purchase of fixed assets- Mahindra & Mahindra Limited 439.50 544.51 - - - Mahindra First Choice Wheels Limited 185.29 11.97 - Mahindra First Choice Services Limited - 118.00 - NBS International Limited 35.96 - Mahindra Retail Limited 83.76 - Others - 417.26 Sale of fixed assets- Mahindra & Mahindra Limited- Mahindra First Choice Wheels Limited - 8.94 - Mahindra First Choice Services Limited - 300.34 Investments made- Mahindra Finance USA, Inc 963.21 - Ideal Finance Ltd 4,399.60 - Smartshift Logistics Solutions Pvt Ltd. 250.00 Fixed deposits taken- Mahindra Engineering & Chemical Products Ltd 124.00 - PSL Media & Communications Ltd 100.00 - Mahindra Holidays & Resorts India Limited 1,590.00 - Mr. Ramesh Iyer 172.10 40.39 - Mr. V Ravi 100.00 8.13 - Mr. C. B. Bhave 30.00 30.00 - Others 420.23 247.97 Fixed deposits matured- PSL Media & Communications Ltd 80.00 - Mr. Ramesh Iyer 65.72 61.48 - Others 208.83 193.61 Dividend paid- Mahindra & Mahindra Limited 20,553.50 12,648.31 - - Mr. Ramesh Iyer - - 51.12 31.12 - - Mr. V Ravi 34.53 21.25 - Ms. Rama Bijapurkar 1.95 1.20 - Mr. Dhananjay Mungale 3.25 2.00 - Mr. V. S. Parthasarthy 0.02 0.01 - Others 0.07 0.03

Relatives of Key Management PersonnelParticulars Holding Company Fellow Subsidiaries / Joint Ventures / Associates of Holding Company

Joint Venture(s) / Associate(s) Key Management Personnel

302


52 Related party disclosures: (Continued)


Rs. in lakhs


ii) The nature and volume of transactions of the Company during the year with above related parties were as follows: (Continued)Rs. in lakhs











Inter corporate deposits taken- Mahindra & Mahindra Limited 30,000.00 80,000.00 - - - - - Tech Mahindra Limited - 40,000.00 - - - Mahindra Logistics Limited 1,500.00 1,500.00 -Mahindra Vehicle Manufacturers Limited - 35,000.00 - Swaraj Engines Limited 2,000.00 1,000.00 - Mahindra Water Utilities Limited 2,875.00 350.00 - Mahindra First Choice Wheels Ltd. 5,000.00 - - Mahindra Holidays and Resorts India Limited 6,500.00 - - Mahindra Intertrade Limited 1,500.00 1,100.00

Inter corporate deposits repaid / matured- Mahindra & Mahindra Limited 45,000.00 80,000.00 - - - Tech Mahindra Limited 50,000.00 10,000.00 - - - Mahindra Vehicle Manufacturers Limited 15,000.00 20,000.00 - Mahindra Logistics Limited 1,500.00 -Mahindra Water Utilities Limited 1,550.00 - Mahindra First Choice Wheels Ltd. 3,000.00 - Swaraj Engines Limited 1,000.00 - Mahindra Intertrade Limited 1,000.00 100.00

Debentures issued- Mahindra & Mahindra Limited 19,500.00

Inter corporate deposits given - - - Mahindra First Choice Services Limited - 700.00

Inter corporate deposits refunded- Mahindra First Choice Services Limited - 700.00

Issue of Share Capital (incl Securities premium)- Mahindra & Mahindra Limited - - - -

Key Management Personnel as defined in Ind AS 24

Relatives of Key Management PersonnelParticulars Holding Company Fellow Subsidiaries / Associate of Holding Company

Associate Companies Key Management Personnel

303


52iii) Balances as at the end of the year:











Balances as at the end of the periodReceivables- Mahindra & Mahindra Limited 297.83 2731.41 - - - NBS International Limited 0.03 26.11 - 2 x 2 Logistics Private Limited - 135.09 - Mahindra Construction Co. Ltd. - 334.33 Loan given (including interest accrued but not due)- Mahindra Construction Co. Ltd. 334.33 334.33 - Smartshift Logistics Solutions Pvt Ltd. 1,879.96 1,700.00 Inter corporate deposits given (including interest accrued but not due)- Mahindra Construction Co. Ltd. 113.38 113.38 Investments- Mahindra Finance USA, Inc. - - 21,054.81 21,054.81 - Ideal Finance Ltd 4,399.60 - New Democratic Electoral Trust 1.00 1.00 - Smartshift Logistics Solutions Pvt Ltd. 950.00 700.00 Debentures (including interest accrued but not due)- Mahindra & Mahindra Limited 20109.37- Tech Mahindra Limited 15,965.16 - Payables- Mahindra & Mahindra Limited- Mahindra First Choice Wheels Limited 349.46 239.58 - Mahindra Retail Limited 97.60 - - Mahindra USA, Inc. 161.38 58.60 - Mahindra Integrated Business Solutions Limited

138.48 53.94

- NBS International Limited 31.63 - - Others 16.96 96.13 Inter corporate deposits taken (including interest accrued but not due)

- Mahindra & Mahindra Limited 31023.02 46739.35- Tech Mahindra Limited 52,065.19 - Mahindra Logistics Limited 1,554.38 1,500.61 - Mahindra First Choice Wheels Ltd. 2,003.74 -Mahindra Vehicle Manufacturers Limited 15,072.21 - Swaraj Engines Limited 2,086.95 1,041.05 - Mahindra Water Utilities Limited 1,689.59 351.98 - Mahindra Holidays and Resorts India 6,551.19 - Mahindra Intertrade Limited 1,533.92 1,029.78 Fixed deposits (including interest - Mahindra Engineering & Chemical Products Ltd

125.04

- PSL Media & Communications Ltd 104.25 - Mahindra Holidays & Resorts India Limited

1,602.03

- Mr. Ramesh Iyer 175.82 41.83 - Mr V Ravi 113.97 8.19 - Mr C. B. Bhave 88.24 52.54 - Others 486.47 288.74



Relatives of Key Management Personnel

Notes to Consolidated Financial Statements

Rs. in lakhs

Particulars Holding Company Fellow Subsidiaries / Joint Ventures / Associates of

Holding Company Joint Venture(s) / Associate(s) Key Management Personnel

304


52iv) Disclosure required under Section 186 (4) of the Companies Act, 2013




Repayments/sale


(A) Loans and advancesSmartshift Logistics Solutions Pvt. Ltd. (refer note no. (iii)) Fellow subsidiary 1,700.00 800.00 637.18 1,862.82

1,700.00 800.00 637.18 1,862.82 (B) InvestmentsMahindra Finance USA, LLC Associate 21,054.81 - - 21,054.81 Ideal Finance Limited, Sri Lanka Joint Venture - 4,399.60 - 4,399.60 Smartshift Logistics Solutions Pvt. Ltd. (refer note no. (iii)) Fellow subsidiary 700.00 250.00 - 950.00 New Democratic Electoral Trust Fellow subsidiary 1.00 - - 1.00

21,755.81 4,649.60 - 26,405.41 Total 23,455.81 5,449.60 637.18 28,268.23

Notes : i) Above loans & advances and investments have been given for general business purposes.

ii) There were no guarantees given / securities provided during the year.




Repayments/sale


(A) Loans and advancesFellow Associate - 1,700.00 - 1,700.00

- 1,700.00 - 1,700.00

(B) InvestmentsMahindra Finance USA, LLC Associate 20,091.60 963.21 21,054.81 Smartshift Logistics Solutions Pvt. Ltd. (refer note no. (iii)) Fellow Associate 700.00 - - 700.00 New Democratic Electoral Trust Fellow subsidiary 1.00 - - 1.00

20,792.60 963.21 - 21,755.81

Total 20,792.60 2,663.21 - 23,455.81 Notes :

i) Above loans & advances and investments have been given for general business purposes.ii) There were no guarantees given / securities provided during the year.

Related party disclosures: (Continued)Rs. in lakhs

Notes to Consolidated Financial Statements (Continued)Mahindra & Mahindra Financial Services Limited

iii) Formerly known as Resfeber Labs Private Limited (RLPL) post merger of Orizonte Business Solutions Limited with the former.Orizonte Business Solutions Limited was acquired by or merged with Resfeber Labs Private Limited (RLPL) in June 2019 and then the name of RLPL waschanged to Smartshift Logistics Solutions Private Limited w.e.f. 22 July 2019. The closing balance at the end of the respective years includes additionalinvestment made and fair value gain recognised as per Ind AS 109 - Financial Instruments.

iii) Formerly known as Resfeber Labs Private Limited (RLPL) post merger of Orizonte Business Solutions Limited with the former.Orizonte Business Solutions Limited was acquired by or merged with Resfeber Labs Private Limited (RLPL) in June 2019 and then the name of RLPL waschanged to Smartshift Logistics Solutions Private Limited w.e.f. 22 July 2019. The closing balance at the end of the respective years includes additionalinvestment made and fair value gain recognised as per Ind AS 109 - Financial Instruments.


305


52 Related party disclosures: (Continued)Rs. in lakhs

Notes to Consolidated Financial Statements (Continued)Mahindra & Mahindra Financial Services Limited

v) Details of related party transactions with Key Management Personnel (KMP) are as under :

Rs. in lakhs

Name of the KMP Nature of transactions 31 March 2020 31 March 2019

Mr. Ramesh Iyer (Vice-Chairman & Managing Director)Gross Salary including perquisites 469.72 446.15 Commission 164.12 116.69 Stock Option 7.10 139.91 Others - Contribution to Funds 29.70 26.05

670.64 728.80

Mr. V. Ravi (Executive Director & Chief Financial Officer)Gross Salary including perquisites 242.43 227.51 Commission 95.07 53.05 Stock Option - 1.21 Others - Contribution to Funds 9.00 10.63

346.49 292.40

Mr. Dhananjay Mungale (Chairman & Independent Director)Commission 28.00 26.00 Other benefits 11.30 10.00

39.30 36.00

Ms. Rama Bijapurkar (Independent Director)Commission 21.00 19.00 Other benefits 8.50 6.70

29.50 25.70

Mr. C.B. Bhave (Independent Director)Commission 21.00 19.00 Other benefits 9.90 9.10

30.90 28.10

Mr. Milind Sarwate (Independent Director)(Appointed w.e.f. 1 April 2019) Commission - -

Other benefits 9.70 -

9.70 -

Mr. Arvind V. Sonde (Independent Director)(Appointed w.e.f. 9 December 2019) Commission - -

Other benefits 1.40 -

1.40 -

Key management personnel are those individuals who have the authority and responsibility for planning and exercising power to directly or indirectly control the activities of the Company or its employees. The Company considers its Managing Director to be key management personnel for the purposes of IND AS 24 Related Party Disclosures.

306

Mahindra & Mahindra Financial Services LimitedNotes to Consolidated Financial Statements (Continued)for year ended 31 March 2020

53 Disclosure of interest in Subsidiaries and interest of Non Controlling Interest :a) Details of Group's subsidiaries at the end of the reporting period are as follows:

Name of the Subsidiary Place of Incorporation and Place of Operation

2020 2019

Mahindra Insurance Brokers Limited (MIBL) India 80.00% 80.00%Mahindra Rural Housing Finance Limited (MRHFL) # India 99.60% 99.71%Mahindra Asset Management Company Pvt. Ltd (MAMCL) India 100.00% 100.00%Mahindra Trustee Company Pvt. Ltd (MTCPL) India 100.00% 100.00%Mahindra & Mahindra Financial Services Limited Employees Stock Option Trust

India 100.00% 100.00%Mahindra Rural Housing Finance Limited Employee Welfare Trust India 100.00% 100.00%Mahindra Finance CSR Foundation * India 100.00% NA

b) Details of Group's associate / joint venture at the end of the reporting period are as follows:Name of the Associate / Joint Venture Place of

Incorporation and Place of Operation

2020 2019

Mahindra Finance USA, LLC USA 49.00% 49.00%Ideal Finance Ltd # Sri Lanka 38.20% NA

The above associate(s) / joint venture(s) are accounted for using equity method in these consolidated financial statements.

Proportion of Ownership Interest / Voting power

Rs. in lakhs

Proportion of Ownership Interest / Voting power

# During the year ended 31 March 2020, the Company has entered in to a share subscription, share purchase and shareholders' agreement with Ideal Finance Limited ("IdealFinance") and its existing Shareholders to form and operate a Joint Venture in the financial services sector in Sri Lanka. Pursuant to these agreements, the Company has agreedto subscribe / acquire up to 58.20% of the Equity share capital of Ideal Finance, in one or more tranches over a specified period of time, for an amount not exceeding SriLankan Rupees (LKR) 200.30 crores (equivalent to around Rs.80.12 crores at foreign exchange rate of INR 1 to LKR 2.5). Upon acquisition of above stake, Ideal Finance willbecome a subsidiary of the Company. As part of this agreement, the Company has remitted an amount of Rs. 4,399.60 lakhs (equivalent to LKR 11,000.00 lakhs) to IdealFinance towards acquisition of 38.20% of the Equity share capital under first and second tranches as prescribed in these agreements.

# Pursuant to the offer made by National Housing Bank (NHB), the Board of Directors of the Company, at its meeting held on 27 March 2019, had approved the acquisition of1,18,91,511 equity shares of Rs.10/- each of Mahindra Rural Housing Finance Limited, a subsidiary of the Company, at a premium of Rs. 231.16, for cash, aggregating to Rs.28,677.57 lakhs. During the year ended 31 March 2020, the Company had settled the entire amount of obligation as per the terms and conditions of the agreement.

* During the year ended 31 March 2020,, the Company had incorporated a Wholly-owned subsidiary company, namely, Mahindra Finance CSR Foundation, under theprovisions of section 8 of the Companies Act, 2013 for undertaking the CSR activities of the Company and its subsidiaries.

307


53 Disclosure of interest in Subsidiaries and interest of Non Controlling Interest (Continued)c) Details of Non-Wholly Owned Subsidiaries that have material Non Controlling Interest:

Rs. in lakhsName of the Subsidiary Place of

Incorporation and Place of

Operation2020 2019 2020 2019 2020 2019

Mahindra Insurance Brokers Limited India 20.00% 20.00% 1,022.80 1,421.09 8,640.08 7,617.28 Mahindra Rural Housing Finance Limited India 0.40% 0.29% - 72.46 328.12 233.60 TOTAL 1,022.80 1,493.55 8,968.20 7,850.88

Proportion of Ownership Interest and voting rights held by Non-controlling

interests

Profit / (Loss) (including OCI) allocated to Non-

controlling interestAccumulated Non-controlling

interest

Rs. in lakhs

The Company has written put option available for acquiring ownership interest held by Non Controlling Interest in Mahindra InsuranceBrokers Limited.

308


53 Disclosure of interest in Subsidiaries and interest of Non Controlling Interest (Continued)d)

Rs. in lakhs

2020 2019 2020 2019

Financial Assets 48,510.25 43,838.33 8,09,069.61 7,73,285.60

Non Financial Assets 5,896.02 2,845.75 15,661.81 10,920.52

Financial Liabilities 7,153.44 5,730.46 6,96,917.74 6,69,414.00

Non Financial Liabilities 4,984.61 2,867.25 2,999.52 2,083.84

Equity interest attributable to the owners 33,628.14 30,469.10 1,24,486.04 1,12,474.68

Non-controlling interest 8,640.08 7,617.27 328.12 233.60

Total Income 33,688.88 32,336.34 1,52,760.51 1,38,394.71

Expenses 28,352.69 25,186.95 1,37,904.81 1,13,347.84

Profit / (Loss) for the year 5,336.19 7,149.39 14,855.70 25,046.87

Total Comprehensive Income for the year 5,113.98 7,105.43 14,740.81 24,987.45

Total Comprehensive Income attributable to the owners of the company 4,091.18 5,684.34 14,681.86 22,424.29

Total Comprehensive Income attributable to the Non-controlling interest 1,022.80 1,421.09 58.96 2,563.16

Dividends paid to Non-controlling interest 154.64 92.78 6.97 202.21

Opening Cash & Cash Equivalents 563.36 1,095.10 2,982.62 5,577.07

Closing Cash & Cash Equivalents 1,310.24 563.36 9,238.78 2,982.62

Net Cash inflow / (outflow) 746.88 (531.74) 6,256.16 (2,594.45)

Rs. in lakhs

Mahindra Insurance Brokers Limited Mahindra Rural Housing Finance Limited

Summarised financial information in respect of each of the Group's subsidiaries that has material non-controlling interests is setout below. The summarised financial information below represents amounts before intragroup eliminations and considered inconsolidated financial statements:Particulars

309

Mahindra & Mahindra Financial Services LimitedNotes to Consolidated Financial Statements (Continued)for the year ended 31 March 2020

53 Disclosure of interest in Subsidiaries and interest of Non Controlling Interest (Continued)e)

Rs. in lakhs Rs. in lakhs2020 2019 2020 2019

Financial Assets 8,04,167.86 7,32,488.68 19,820.32 -

Non Financial Assets 3,828.03 3,209.72 553.67 -

Financial Liabilities 7,07,236.92 6,52,719.78 10,538.97 -

Non Financial Liabilities - - 520.29 -

Equity interest attributable to the owners 49,371.81 40,659.50 3,558.22 -

Non-controlling interest 51,386.98 42,319.37 5,756.50 -

Total Interest Income 47,057.68 45,722.94 3,579.14 -

Other income 1,731.35 1,396.58 131.07 -

Finance Costs 22,779.74 20,588.03 1,442.94 -

Depreciation and amortisation - - 115.32 -

Other expenses 13,210.88 13,942.10 1,476.61 -

Income tax expense 3,457.04 3,011.76 225.38 -

Profit / (Loss) for the year 9,342.08 9,577.62 449.97 -

Total Comprehensive Income for the year 9,342.08 9,577.62 449.97 -

Total Comprehensive Income attributable to the owners of the company 4,577.49 4,693.08 12.25 -

Total Comprehensive Income attributable to the Non-controlling interest 4,764.59 4,884.54 278.08 -

Opening Cash & Cash Equivalents 1,823.23 1,628.04 205.96 -

Closing Cash & Cash Equivalents 268.21 1,674.40 176.90 -

Net Cash inflow / (outflow) (1,555.02) 46.36 (29.06) -

Rs. in lakhs Rs. in lakhs2020 2019 2020 2019

Closing Net Assets 1,00,758.79 83,457.31 9,314.72 -

Group share in % 49.00% 49.00% 38.20% -

Group share 49,371.81 40,894.08 3,558.22 -

Carrying amount 49,371.81 40,894.08 4,411.85 - #During the year ended 31 March 2020, the Company has entered in to a share subscription, share purchase and shareholders' agreement with Ideal Finance Limited ("Ideal Finance") and its existing Shareholders to form and operate a Joint Venture in the financial services sector in Sri Lanka.

Rs. in lakhs

Particulars Mahindra Finance USA, LLC

Particulars Mahindra Finance USA, LLC

Summarised financial information in respect of each of the Group's associate and joint venture that has material non-controllinginterests is set out below. The summarised financial information below represents amounts before intragroup eliminations and arebased on their standalone financial statements:

Reconciliation of the above summarised financial information to the carrying amount of the interest in the associate and joint venture recognised in the consolidated financial statements :

Ideal Finance Ltd

Ideal Finance Ltd#

310


54 Additional information as required under Schedule III to the Companies Act, 2013:Statement of Net assets, Profit and loss and Other comprehensive income attributable to Owners and Non-controlling interest

Rs. in lakhs

As % of consolidated

net assetsAmount As % of

consolidated profit or loss

Amount As % of consolidated

other comprehensive

income

Amount As % of consolidated

totalcomprehensive

income

Amount

ParentMahindra & Mahindra Financial Services Limited 88.80% 10,70,764.16 80.56% 87,470.09 -8.12% (266.35) 77.96% 87,203.74 SubsidiariesIndian -1. Mahindra Insurance Brokers Limited 2.75% 33,153.99 3.93% 4,268.95 -5.42% (177.77) 3.66% 4,091.18 2. Mahindra Rural Housing Finance Limited 6.22% 75,065.26 13.68% 14,855.71 -3.50% (114.89) 13.18% 14,740.82 3. Mahindra Asset Management Company Limited -1.18% (14,197.72) -3.49% (3,789.82) -0.54% (17.57) -3.40% (3,807.39) 4. Mahindra Trustee Company Private Limited 0.00% (29.63) 0.00% (1.84) 0.00% - 0.00% (1.84)

0.29% 3,489.22 0.11% 124.64 0.00% - 0.11% 124.64

0.03% 325.69 0.00% (2.68) 0.00% - 0.00% (2.68) 0.00% (0.25) 0.00% (0.25) 0.00% - 0.00% (0.25)

Foreign - - - - - - - - - Non-controlling Interests in all Subsidiaries 0.74% 8,968.20 0.98% 1,067.24 -1.36% (44.44) 0.91% 1,022.80 Associates (Investment as per the equity method)Indian - - - - - - - - - Foreign -Mahindra Finance USA, LLC 2.35% 28,317.50 4.22% 4,577.48 118.94% 3,900.25 7.58% 8,477.73 Joint Ventures (Investment as per the equity method)Indian - - - - - - - - - Foreign -Ideal Finance Limited 0.00% 12.25 0.01% 12.25 0.00% - 0.01% 12.25 Total 100.00% 12,05,868.67 100.00% 1,08,581.77 100.00% 3,279.23 100.01% 1,11,861.00

7. Mahindra Finance CSR Foundation

5. Mahindra & Mahindra Financial Services Limited Employees Stock Option Trust6. Mahindra Rural Housing Finance Limited Employee Welfare Trust


Net assets, i.e. total assets minus total liabilities

Share in profit or loss Share in other comprehensive income

Share in total comprehensive incomeName of the entity in the Group

Rs. in lakhs

311


55 Events after the reporting date


Executive Director & Chief Financial Officer [DIN: 00307328]

During the year ended 31 March 2020, the Company along with Mahindra Asset Management Company Private Limited (MAMCPL) andMahindra Trustee Company Private Limited (MTCPL), wholly-owned subsidiaries of the Company, had entered in to a share subscriptionagreement and shareholders' agreement to form a 51:49 Joint Venture with Manulife Asset Management (Singapore) Pte. Ltd. (Manulife).Pursuant to these agreements, Manulife was required to make an equity investment aggregating to US $ 35.00 million to acquire 49% of theshare capital of MAMCPL & MTCPL.The transaction was settled on 29 April 2020 in accordance with share subscription and shareholders' agreements to acquire a 49% stake inMIAMCPL and MTCPL by Manulife. The said agreements have also provided for sale of certain number of equity shares of MAMCPL byMMFSL at an agreed valuation within the overall stake divestment of 49% to Manulife. Accordingly, under the sale transaction, 1,47,00,000equity shares of MAMCPL, equivalent to 7% of the fully paid up equity share capital of MAMCPL, for a consideration of Rs. 2080.10 lakhs(equivalent to USD 2.73 million), have been transferred in dematerialized form to Manulife. This sale transaction has been recorded in thebooks of accounts on 29 April 2020.Consequent to the above, the shareholding of the Company in MAMCPL and MTCPL has come down from 100% to 51% of the share capitalrespectively, and accordingly, MAMCPL and MTCPL will cease to be wholly-owned subsidiaries of the Company but, continue to remain theCompany's subsidiaries.

Signatures to Notes 1 to 55There have been no other events after the reporting date that require disclosure in these financial statements.

Mumbai15 May 2020


Chartered AccountantsFirm's Registration No:101248W/W-



V. Ravi

Mumbai15 May 2020

Company Secretary


[DIN: 00220759]

Arnavaz Pardiwalla


For B S R & Co. LLP For and on behalf of the Board of DirectorsAs per our report of even date attached.

Rs. in lakhs

312




Fax +91 (22) 4345 5399

Limited Review Report on unaudited quarterly consolidated financial results of Mahindra & Mahindra Financial Services Limited under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

To the Board of Directors of Mahindra & Mahindra Financial Services Limited

1. We have reviewed the accompanying Statement of unaudited consolidated financial results of Mahindra·& Mahindra Financial Services Limited (‘the Parent’) and its subsidiaries (the Parent and its subsidiaries together referred to as ‘the Group’), and its share of the net profit after tax and total comprehensive income of its associate and joint ventures for the quarter ended 30 June 2020 (‘the Statement’), being submitted by the Parent pursuant to the requirements of Regulation 33 of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended (the “Listing Regulations”).

2. This Statement, which is the responsibility of the Parent’s management and approved by the Parent’s Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 “Interim Financial Reporting” (“Ind AS 34”), prescribed under Section 133 of the Companies Act, 2013, and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. Our responsibility is to express a conclusion on the Statement based on our review.

3. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, issued by the Institute of Chartered Accountants of India. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We also performed procedures in accordance with the circular issued by the SEBI under Regulation 33 (8) of the Listing Regulations, to the extent applicable.


Registered Office: 5th Floor, Lodha Excelus Apollo Mills Compound N. M. Joshi Marg, Mahalaxmi Mumbai - 400 011. India 313

Limited Review Report on unaudited quarterly consolidated financial results of Mahindra & Mahindra Financial Services Limited under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Continued)

Mahindra & Mahindra Financial Services Limited 4. The Statement includes the results of the following entities:

Name of the entity Relationship

Mahindra & Mahindra Financial Service Limited Parent Company

Mahindra Insurance Brokers Limited Subsidiary

Mahindra Rural Housing Finance Limited Subsidiary

Mahindra Manulife Investment Management Private Limited (erstwhile Mahindra Asset Management Company Private Limited) (subsidiary uptil 28 April 2020, joint venture w.e.f. 29 April 2020)

Joint Venture

Mahindra Manulife Trustee Private Limited (erstwhile Mahindra Trustee Company Private Limited) (subsidiary uptil 28 April 2020, joint venture w.e.f. 29 April 2020)

Joint Venture

Mahindra Finance USA, LLC Associate

Mahindra & Mahindra Financial Services Limited Employees Stock Option Trust Subsidiary

Mahindra Rural Housing Finance Limited Employee Welfare Trust Subsidiary

Mahindra Finance CSR Foundation Subsidiary

Mahindra Ideal Finance Limited Joint Venture

5. Attention is drawn to the fact that the figures for the three months ended 31 March 2020 as reported in these financial results are the balancing figures between audited figures in respect of the full previous financial year and the published year to date figures up to the third quarter of the previous financial year. The figures up to the end of the third quarter of previous financial year had only been reviewed and not subjected to audit.

6. Based on our review conducted and procedures performed as stated in paragraph 3 above and based on the consideration of the review reports of the other auditors referred to in paragraph 8 below, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the recognition and measurement principles laid down in the aforesaid Indian Accounting Standard and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of Regulation 33 of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

7. As described in Note 8 to the Statement, in respect of accounts where moratorium benefit has been granted, the staging of those accounts as at 30 June 2020 is based on the days past due status as on the date when the moratorium benefit was granted and is in accordance with the COVID-19 Regulatory Package announced by the Reserve Bank of India vide notifications dated 27 March 2020, 17 April 2020 and 23 May 2020. Further, the extent to which the COVID-19 pandemic will impact the Group’s financial performance is dependent on future developments, which are highly uncertain. Our conclusion on the Statement is not modified in respect of this matter.

314

Limited Review Report on unaudited quarterly consolidated financial results of Mahindra & Mahindra Financial Services Limited under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Continued)

Mahindra & Mahindra Financial Services Limited 8. We did not review the interim financial information of one subsidiary included in the

Statement, whose interim financial information reflect total revenues (before consolidation adjustments) of Rs. 4,117.27 lakhs, total net profit after tax (before consolidation adjustments) of Rs. 197.73 lakhs and total comprehensive income (before consolidation adjustments) of Rs. 238.50 lakhs for the quarter ended 30 June 2020, as considered in the unaudited consolidated financial results. The unaudited consolidated financial results also include the Group’s share of net loss after tax (before consolidation adjustments) of Rs. 279.87 lakhs and total comprehensive loss (before consolidation adjustments) of Rs. 282.05 lakhs for the quarter ended 30 June 2020, as considered in the Statement, in respect of two joint ventures, whose interim financial information have not been reviewed by us. These interim financial information have been reviewed by other auditors whose reports have been furnished to us by the management and our conclusion on the Statement, in so far as it relates to the amounts and disclosures included in respect of this subsidiary and joint ventures, is based solely on the reports of the other auditors and the procedures performed by us as stated in paragraph 3 above.

Our conclusion on the Statement is not modified in respect of this matter.

9. The Statement includes the interim financial information of three subsidiaries which have not been reviewed/audited, whose interim financial information reflect total revenue (before consolidation adjustments) of Rs. 49.28 lakhs, total net profit after tax (before consolidation adjustments) of Rs. 9.54 lakhs and total comprehensive income (before consolidation adjustments) of Rs. 9.54 lakhs for the quarter ended 30 June 2020, as considered in the Statement. The Statement also includes the Group’s share of net profit after tax (before consolidation adjustments) of Rs. 1,622.00 lakhs and total comprehensive income (before consolidation adjustments) of Rs. 1,622.00 lakhs for the quarter ended 30 June 2020, as considered in the unaudited consolidated financial results, in respect of one associate and one joint venture, based on their interim financial information which have not been reviewed/audited. According to the information and explanations given to us by management, this interim financial information is not material to the Group.

Our conclusion on the Statement is not modified in respect of this matter.

For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W-100022 Sagar Lakhani

Partner Mumbai Membership No: 111855 18 July 2020 ICAI UDIN: 20111855AAAAFC2115

315




Fax +91 (22) 4345 5399

Limited review report on unaudited quarterly standalone financial results of Mahindra & Mahindra Financial Services Limited under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

To the Board of Directors of Mahindra & Mahindra Financial Services Limited 1. We have reviewed the accompanying Statement of unaudited standalone financial results of

Mahindra & Mahindra Financial Services Limited (‘the Company’) for the quarter ended 30 June 2020 (the “Statement”).

2. This Statement, which is the responsibility of the Company’s management and approved by the Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 “Interim Financial Reporting” (“Ind AS 34”), prescribed under Section 133 of the Companies Act, 2013, and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“the Listing Regulations”). Our responsibility is to issue a report on the Statement based on our review.

3. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion.

4. Attention is drawn to the fact that the figures for the three months ended 31 March 2020 as reported in these financial results are the balancing figures between audited figures in respect of the full previous financial year and the published year to date figures up to the third quarter of the previous financial year. The figures up to the end of the third quarter of previous financial year had only been reviewed and not subjected to audit.

5. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with applicable accounting standards and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of Regulation 33 of the Listing Regulations including the manner in which it is to be disclosed, or that it contains any material misstatement.


Registered Office: 5th Floor, Lodha Excelus Apollo Mills Compound N. M. Joshi Marg, Mahalaxmi Mumbai - 400 011. India 316

Limited review report on unaudited quarterly standalone financial results of Mahindra & Mahindra Financial Services Limited under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Continued)

Mahindra & Mahindra Financial Services Limited 6. As described in Note 8 to the Statement, in respect of accounts where moratorium benefit has

been granted, the staging of those accounts as at 30 June 2020 is based on the days past due status as on the date when the moratorium benefit was granted and is in accordance with the COVID-19 Regulatory Package announced by the Reserve Bank of India vide notifications dated 27 March 2020, 17 April 2020 and 23 May 2020. Further, the extent to which the COVID-19 pandemic will impact the Company’s financial performance is dependent on future developments, which are highly uncertain. Our opinion is not modified in respect of these matters.

For B S R & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022 Sagar Lakhani Partner Mumbai Membership No: 111855 18 July 2020 ICAI UDIN: 20111855AAAAFB6206

317

Rs. in LakhsYear ended

30 June 31 March 30 June 31 March2020 2020 2019 2020

(Unaudited) (Audited) (Unaudited) (Audited)Revenue from operations

i) Interest income 299,238.59 298,962.65 272,876.24 1,145,761.28 ii) Dividend income 11.68 18.50 958.77 2,715.21 iii) Rental income 335.89 368.95 115.55 874.93 iv) Fees and commission Income 999.97 2,853.56 1,810.47 10,413.36 v) Net gain on fair value changes 2,067.28 1,199.01 59.48 2,561.56 vi) Sale of services 3,008.84 6,697.07 6,367.22 25,968.81

I Total Revenue from operations 305,662.25 310,099.74 282,187.73 1,188,295.15 II Other income 1,206.15 3,924.34 1,654.74 11,350.46 III Total income (I+II) 306,868.40 314,024.08 283,842.47 1,199,645.61

Expensesi) Finance costs 140,115.15 143,064.96 126,259.77 539,056.37 ii) Fees and commission expense 899.27 2,815.04 3,555.19 12,489.86 iii) Impairment on financial instruments (refer note 8) 94,884.74 82,190.49 67,691.31 231,897.83 iv) Employee benefits expenses 29,911.03 32,111.65 47,253.26 160,982.02 v) Depreciation, amortization and impairment 3,786.59 1,899.95 4,143.78 14,687.38 vi) Other expenses 11,089.78 22,125.75 20,272.36 84,918.91

IV Total expenses 280,686.56 284,207.84 269,175.67 1,044,032.37 V 26,181.84 29,816.24 14,666.80 155,613.24 VI Exceptional item (refer note 7) 22,854.07 - - - VII Share of profit of associate & joint ventures 1,342.13 822.99 1,328.01 4,589.73 VIII Profit before tax (V+VI+VII) 50,378.04 30,639.23 15,994.81 160,202.97 IX Tax expense :

i) Current tax 111.35 52,085.08 4,597.41 64,730.05 ii) Deferred tax 7,054.75 (45,335.71) 551.17 (12,989.05) iii) (Excess) / Short provision for Income Tax - earlier years - - - (119.80)

7,166.10 6,749.37 5,148.58 51,621.20 X Profit for the period / year (VIII-IX) 43,211.94 23,889.86 10,846.23 108,581.77 XI Other Comprehensive Income (OCI)

A) (i) Items that will not be reclassified to profit or loss - Remeasurement loss on defined benefit plans 373.65 535.01 (1,980.28) (1,581.38) - Net gain/(loss) on equity instruments through OCI 798.07 316.60 (47.95) 268.65 (ii) Income tax relating to the above items (284.31) (289.70) 651.59 40.59 Subtotal (A) 887.41 561.91 (1,376.64) (1,272.14)

B) (i) Items that will be reclassified to profit or loss 157.39 2,712.17 (206.74) 3,900.25

- Net gain on debt instruments through OCI (256.03) 767.09 - 767.09 (ii) Income tax relating to the above items 64.43 (115.97) - (115.97) Subtotal (B) (34.21) 3,363.29 (206.74) 4,551.37 Other Comprehensive Income (A + B) 853.20 3,925.20 (1,583.38) 3,279.23

XII Total Comprehensive Income for the period / year (X+XI) 44,065.14 27,815.06 9,262.85 111,861.00 Profit for the period attributable to:Owners of the Company 43,172.39 23,481.83 10,723.05 107,514.53 Non-controlling interests 39.55 408.03 123.18 1,067.24

43,211.94 23,889.86 10,846.23 108,581.77 Other Comprehensive Income for the period attributable to:Owners of the Company 845.05 3,934.86 (1,552.93) 3,323.67 Non-controlling interests 8.15 (9.66) (30.45) (44.44)

853.20 3,925.20 (1,583.38) 3,279.23 Total Comprehensive Income for the period attributable to:Owners of the Company 44,017.44 27,416.69 9,170.12 110,838.20 Non-controlling interests 47.70 398.37 92.73 1,022.80

44,065.14 27,815.06 9,262.85 111,861.00 XIII Earnings per equity share (face value of Rs.2/- each) #

Basic (Rupees) 7.01 3.82 1.74 17.48 Diluted (Rupees) 7.00 3.81 1.74 17.44 # Earnings per share for the interim period is not annualized.

Profit before exceptional item, share of profit of associate & joint ventures and tax (III-IV)

- Exchange differences in translating the financial statements of foreign operations

Mahindra & Mahindra Financial Services LimitedCIN : L65921MH1991PLC059642

Registered Office: Gateway Building, Apollo Bunder, Mumbai 400 001. Tel. No. +91 22 22895500 Fax: +91 22 22875485Corporate Office: Mahindra Towers, 4th Floor, Dr. G.M. Bhosale Marg, Worli, Mumbai 400 018. Tel. No. +91 22 66526000 Fax: +91 22 24984170 / 71

Website : www.mahindrafinance.com ; Email : [email protected] OF UNAUDITED CONSOLIDATED FINANCIAL RESULTS FOR THE QUARTER ENDED 30 JUNE 2020

ParticularsQuarter ended

318

Year ended30 June 31 March 30 June 31 March

2020 2020 2019 2020 (Unaudited) (Audited) (Unaudited) (Audited)

Revenue from operationsi) Interest income 260,912.13 259,282.31 236,646.01 994,171.19 ii) Dividend income 1.65 4.92 908.09 2,425.09 iii) Rental income 335.89 368.95 115.55 874.93 iv) Fees and commission Income 833.57 2,672.97 1,705.89 9,698.85 v) Net gain on fair value changes 1,966.70 1,358.78 25.22 2,615.10

I Total Revenue from operations 264,049.94 263,687.93 239,400.76 1,009,785.16 II Other income 1,444.16 3,888.81 1,849.67 14,728.63 III Total income (I+II) 265,494.10 267,576.74 241,250.43 1,024,513.79

Expensesi) Finance costs 126,460.14 128,948.25 112,820.54 482,874.89 ii) Fees and commission expense 231.68 793.32 998.94 4,094.21 iii) Impairment on financial instruments (refer note 8) 84,270.05 67,413.42 61,961.90 205,447.07 iv) Employee benefits expenses 22,453.80 21,343.31 35,208.96 114,844.51 v) Depreciation, amortization and impairment 3,153.60 1,183.93 3,432.98 11,829.36 vi) Other expenses 8,726.04 18,645.89 16,356.78 71,047.51

IV Total expenses 245,295.31 238,328.12 230,780.10 890,137.55 V Profit before exceptional items and tax (III-IV) 20,198.79 29,248.62 10,470.33 134,376.24 VI Exceptional item (refer note 7) 610.10 - - - VII Profit before tax (V-VI) 20,808.89 29,248.62 10,470.33 134,376.24 VIII Tax expense :

i) Current tax - 46,971.89 3,194.00 55,693.89 ii) Deferred tax 5,229.68 (39,815.00) 433.10 (11,958.04)

5,229.68 7,156.89 3,627.10 43,735.85 IX Profit for the period / year (VII-VIII) 15,579.21 22,091.73 6,843.23 90,640.39 X Other Comprehensive Income (OCI)

A) (i) Items that will not be reclassified to profit or loss - Remeasurement gain/(loss) on defined benefit plans 342.33 643.23 (1,794.13) (1,134.18) - Net gain/(loss) on equity instruments through OCI 798.07 316.60 (47.95) 268.65 (ii) Income tax relating to the above items (287.01) (323.35) 643.70 (51.94) Subtotal (A) 853.39 636.48 (1,198.38) (917.47)

B) (i) Items that will be reclassified to profit or loss - Net gain on debt instruments through OCI (256.03) 767.09 - 767.09 (ii) Income tax relating to the above items 64.43 (115.97) - (115.97) Subtotal (B) (191.60) 651.12 - 651.12 Other Comprehensive Income (A + B) 661.79 1,287.60 (1,198.38) (266.35)

XI Total Comprehensive Income for the period / year (IX+X) 16,241.00 23,379.33 5,644.85 90,374.04 XII Earnings per equity share (face value of Rs.2/- each) #

Basic (Rupees) 2.53 3.59 1.11 14.74 Diluted (Rupees) 2.53 3.58 1.11 14.71 # Earnings per share for the interim period is not annualized.

STATEMENT OF UNAUDITED STANDALONE FINANCIAL RESULTS FOR THE QUARTER ENDED 30 JUNE 2020

ParticularsQuarter ended

319

Notes:1)

2)

3)

4)

5)

6)

7)

8)

9)

10)

11)

12)

Ramesh IyerDate : 18 July 2020Place : Mumbai


Vice-Chairman & Managing Director

In accordance with the board approved moratorium policy read with the Reserve Bank of India (RBI) guidelines dated 27 March 2020, 17 April 2020 and 23 May 2020 relatingto ‘COVID-19 - Regulatory Package’, the Company has granted moratorium upto six months on the payment of installments falling due between 01 March 2020 and 31 August2020 to all eligible borrowers. This relaxation does not automatically trigger a significant increase in credit risk. The Company continues to recognise interest income during themoratorium period and in the absence of other credit risk indicators, the granting of a moratorium period does not result in accounts becoming past due and automaticallytriggering Stage 2 or Stage 3 classification criteria.The impact of COVID-19 on the global economy and how governments, businesses and consumers respond is uncertain. This uncertainty is reflected in the Company’sassessment of impairment loss allowance on its loans which are subject to a number of management judgements and estimates. In relation to COVID-19, judgements andassumptions include the extent and duration of the pandemic, the impacts of actions of governments and other authorities, and the responses of businesses and consumers indifferent industries, along with the associated impact on the global economy. While the methodologies and assumptions applied in the impairment loss allowance calculationsremained unchanged from those applied while preparing the financial results for the year ended 31 March 2020, the Company has separately incorporated estimates,assumptions and judgements specific to the impact of the COVID-19 pandemic and the associated support packages in the measurement of impairment loss allowance. TheCompany has been duly servicing its debt obligations, maintains a healthy capital adequacy ratio and has adequate capital and financial resources to run its business. Duringthe quarter ended 30 June 2020, the Company has considered an additional charge of Rs 47,675.95 lakhs in the Standalone statement of profit and loss and Rs. 66,445.85lakhs in the Consolidated statement of profit and loss, due to a management overlay, to reflect deterioration in the macroeconomic outlook. The final impact of this pandemic isvery uncertain and the actual impact may be different than that estimated based on the conditions prevailing as at the date of approval of these financial results. Themanagement will continue to closely monitor the material changes in the macro-economic factors impacting the operations of the Company.

The Taxation Laws (Amendment) Ordinance, 2019 contain substantial amendments in the Income Tax Act 1961 and the Finance (No.2) Act, 2019 to provide an option todomestic companies to pay income tax at a concessional rate. The Company has elected to apply the concessional tax rate and has recognized the provision for income taxand re-measured the net deferred tax assets at concessional rate since 30 September 2019.Charges on secured Non-Convertible Debentures (NCDs) issued by the Company:a) All secured NCDs issued by the Company on private placement basis are secured by pari-passu charges on Aurangabad office and exclusive charge on receivables underloan contracts, owned assets and book debts to the minimum extent of 100% of outstanding secured NCDs; and b) All secured NCDs issued by the Company through public issue are secured by exclusive charge on receivables under loan contracts, owned assets and book debts to theminimum extent of 100% of outstanding secured NCDs.Pursuant to SEBI Circular no. SEBI/HO/DDHS/DDHS/CIR/P/2019/115 dated 22 October 2019, the Company has listed Commercial Papers on National Stock Exchange(NSE).Previous period / year figures have been regrouped / reclassified, wherever found necessary, to conform to current period / year classification.

The above financial results have been reviewed by the Audit Committee and subsequently approved by the Board of Directors of the Company at its meeting held on 18 July2020.The Consolidated financial results for the quarter ended 30 June 2020 include the following entities of the group - i) The unaudited financial results of the subsidiaries, Mahindra Insurance Brokers Limited (80%) and Mahindra Rural Housing Finance Limited (99.60%), and joint ventures, Mahindra Manulife Investment Management Private Limited (51%) (Formerly known as “Mahindra Asset Management Company Private Limited”) and Mahindra Manulife Trustee Private Limited (51%) (Formerly known as “Mahindra Trustee Company Private Limited”);ii) The Management certified financial results of subsidiaries, Mahindra & Mahindra Financial Services Limited Employees' Stock Option Trust (MMFSL ESOP Trust), Mahindra Rural Housing Finance Limited Employee Welfare Trust (MRHFL EWT) and Mahindra Finance CSR Foundation. The standalone financial results of these entities does not constitute a material component of the consolidated financial results; and iii) The Management certified financial results of associate, Mahindra Finance USA LLC (49%), in the United States and joint venture, Ideal Finance Limited (38.20%), in Sri Lanka. The standalone financial results of Mahindra Finance USA LLC and Ideal Finance Limited does not constitute a material component of the consolidated financial results and these have been consolidated as associate and joint venture respectively, under equity method of accounting. In compliance with Regulation 33 of the Securities Exchange Board of India ("SEBI") (Listing Obligations and Disclosure Requirements) Regulations, 2015, a limited review offinancial results for the quarter ended 30 June 2020 has been carried out by the Statutory Auditors.The figures for the last quarter of the previous year are the balancing figures between audited figures in respect of the full financial year and the published year-to-date figuresup to third quarter.There is no separate reportable segment as per Ind AS 108 on 'Operating Segments' in respect of the Company. The Segment Reporting in respect of the ConsolidatedFinancial Results is given in Appendix 1.The Company, on 21 June 2019, along with Mahindra Asset Management Company Private Limited (MAMCPL) and Mahindra Trustee Company Private Limited (MTCPL),then wholly-owned subsidiaries of the Company, had entered in to a share subscription agreement and shareholders' agreement to form a 51:49 Joint Venture with ManulifeAsset Management (Singapore) Pte. Ltd. (Manulife). Pursuant to these agreements, Manulife has made an equity investment aggregating to US $ 35.00 million to acquire 49%of the share capital of MAMCPL & MTCPL.The transaction was settled on 29 April 2020 in accordance with share subscription and shareholders' agreements to acquire a 49% stake in MAMCPL and MTCPL byManulife. The said agreements have also provided for sale of certain number of equity shares of MAMCPL by MMFSL at an agreed valuation within the overall stakedivestment of 49% to Manulife. Accordingly, under the sale transaction, 1,47,00,000 equity shares of MAMCPL, equivalent to 7% of the fully paid up equity share capital ofMAMCPL, for a consideration of Rs. 2080.10 lakhs (equivalent to USD 2.73 million), have been transferred in dematerialized form to Manulife. On this sale transaction, theCompany has recognized a pre-tax profit of Rs.610.00 lakhs on a standalone basis, which is included under exceptional item in the statement of profit and loss for the quarterended 30 June 2020.Consequent to the above, the shareholding of the Company in MAMCPL and MTCPL has come down from 100% to 51% of the share capital respectively. The erstwhilenames of MAMCPL and MTCPL have been changed to Mahindra Manulife Investment Management Private Limited (MMIMPL) and Mahindra Manulife Trustee Private Limited(MMTPL), respectively. In the Consolidated financial statements for the quarter ended 30 June 2020, MMIMPL and MMTPL have been consolidated as joint ventures underequity method of accounting. As a result of this, the Company has recognized a pre-tax profit of Rs. 22,854.07 lakhs, as an exceptional item in the consolidated statement ofprofit and loss for the quarter ended 30 June 2020.

The above financial results of the Company have been prepared in accordance with Indian Accounting Standards ('Ind AS') notified under the Companies (Indian AccountingStandards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016 and accordingly, these financial results together with the results for thecomparative reporting period have been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 “InterimFinancial Reporting” (“Ind AS 34”), prescribed under Section 133 of the the Companies Act, 2013 ("the Act"), and other recognized accounting practices generally accepted inIndia and in compliance with Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”). Anyapplication guidance/ clarifications/ directions issued by the Reserve Bank of India or other regulators are implemented as and when they are issued/ applicable.

320

Appendix 1

Rs. in LakhsYear ended

Particulars 30 June 2020

31 March 2020

30 June 2019

31 March 2020

(Unaudited) (Audited) (Unaudited) (Audited)(a) Segment Revenue

- Financing activities 304,015.11 307,631.58 277,555.78 1,177,274.31 - Others 4,166.55 9,201.91 8,451.76 35,874.04

308,181.66 316,833.49 286,007.54 1,213,148.35 Less : Inter-segment revenue 1,313.26 2,809.41 2,165.07 13,502.74 Net revenue 306,868.40 314,024.08 283,842.47 1,199,645.61

(b) Segment Results (Profit before tax) : - Financing activities 48,720.30 27,944.04 14,576.31 151,765.86 - Share of profit of associate & joint ventures 1,342.13 822.99 1,328.01 4,589.73 - Others 315.61 1,872.20 90.49 3,847.38

50,378.04 30,639.23 15,994.81 160,202.97 Add : Other unallocable income net of unallocable expenditure - - - Net Profit before tax 50,378.04 30,639.23 15,994.81 160,202.97

(c) Segment Assets : - Financing activities 8,452,003.21 8,054,496.33 7,559,936.69 8,054,496.33 - Others 54,552.19 42,832.99 42,016.04 42,832.99 - Other unallocable assets 80,027.44 81,928.49 80,935.60 81,928.49

8,586,582.84 8,179,257.81 7,682,888.33 8,179,257.81 (d) Segment Liabilities :

- Financing activities 7,324,375.45 6,959,253.63 6,523,592.72 6,959,253.63 - Others 11,638.86 14,135.51 14,306.07 14,135.51 - Other unallocable liabilities - - - -

7,336,014.31 6,973,389.14 6,537,898.79 6,973,389.14

Ramesh IyerDate : 18 July 2020Place : Mumbai


Vice-Chairman & Managing Director

Quarter ended

Total

Total

Total

Total


Segment-wise Revenue, Results, Assets and Liabilities for Consolidated results as required under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

321

322

MATERIAL DEVELOPMENTS

Except as stated in this Letter of Offer and as disclosed below, to our knowledge, no circumstances have arisen

since March 31, 2020, which materially or adversely affect or are likely to affect our operations, performance,

prospects or profitability, or the value of our assets:

Pursuant to a resolution passed by our Shareholders at the extra-ordinary general meeting held on June 30, 2020,

the authorised share capital of our Company was increased from ₹1,900 million to ₹5,500 million, and the

Memorandum of Association of our Company was suitably amended, in order to reflect such change.

323

ACCOUNTING RATIOS AND CAPITALISATION STATEMENT

Accounting Ratios

The following tables present certain accounting and other ratios computed and derived from the Consolidated

Financial Statements included in “Financial Statements” on page 115.

Ratio Consolidated

As at June 30, 2020(1) As at March 31, 2020(2) Basic earnings per share (in ₹) 7.01 * 17.48

Diluted earnings per share (in ₹) 7.00* 17.44

Return on net worth (in %) 9.1%# 9.54

Net asset value per Equity Share (in ₹) 200.97 193.75

EBITDA (In ₹ millions) 17,008.36 70,935.70 (1) Derived from the Limited Review Consolidated Financial Results. (2) Derived from the Audited Consolidated Financial Statements.

*Not annualised. #Annualised.

The ratios have been computed as below:

Ratios Computation

Basic earnings per share Net profit after tax as per statement of profit and loss attributable to

Equity Shareholders (after adjusting non-controlling interest), divided

by weighted average number of Equity Shares.

Diluted earnings per share Net profit after tax as per statement of profit and loss attributable to

Equity Shareholders (after adjusting non-controlling interest), divided

by weighted average number of Equity Shares (including the effect of

potential dilutive Equity Shares arising out of exercise of stock options

under ESOS-2010).

Return on net worth (in %) Total comprehensive income (aggregate of profit after tax and other

comprehensive income for the year) as per statement of profit and loss

attributable to Equity Shareholders divided by Average Net worth.

Net asset value (book value) per Equity Share Closing Net worth divided by the number of issued, subscribed and

paid-up Equity Shares outstanding at the end of the financial year.

EBITDA Profit for the year before exceptional items, finance costs, tax,

depreciation, amortization and impairment

Consolidated Capitalisation Statement

The following table sets forth the capitalisation statement of our Company (i) derived from the Limited Review

Consolidated Financial Results; and (ii) as adjusted for the Issue:

(in ₹ millions)

Particulars Pre-Issue as at

June 30, 2020

As adjusted for the

Issue*

Total Borrowings

Debt securities (A) 223,389.61 223,389.61

Borrowings (other than debt securities)(B) 348,003.74 348,003.74

Deposits (C) 88,695.83 88,695.83

Subordinated Liabilities (D) 37,562.56 37,562.56

Total Borrowings (E=A+B+C+D) 697,651.74 697,651.74

Total Equity

Equity Share Capital(F) 1,231.27 2,466.93

Other Equity (excluding non-controlling interests)

(G)

122,923.99 152,595.92

Total Equity (H = F + G) 124,155.26 155,062.85

Total Borrowings / Total Equity (E/H) 5.6 4.5 *Assuming full subscription of the Issue. Not adjusted for Issue related expenses. As adjusted to reflect the number of Equity Shares issued

pursuant to the Issue and proceeds from the Issue.

324

STOCK MARKET DATA FOR SECURITIES OF OUR COMPANY

Our Equity Shares are listed on BSE and NSE. The Equity Shares being issued pursuant to this Issue have not

been listed earlier and will be listed on the Stock Exchanges pursuant to this Issue. For details, see “Terms of the

Issue” on page 338. Our Company has received in-principle approvals for listing of the Equity Shares on the Stock

Exchanges to be issued pursuant to this Issue from BSE and NSE by their respective letters, each dated July 15,

2020. Our Company will also make applications to BSE and NSE to obtain their trading approvals for the Rights

Entitlements as required under the SEBI Rights Issue Circulars. For the purposes of this Issue, the Designated

Stock Exchange is BSE.

For the purpose of this section, unless otherwise specified:

• A year is a financial year;

• Average price is the average of the daily closing prices of our Equity Shares for the year, or the month, as the

case may be;

• High price is the maximum of the daily closing prices and low price is the minimum of the daily closing

prices of our Equity Shares for the year, the month, or the week, as the case may be; and

• In case of two days with the same high/low/closing price, the date with higher volume has been considered.

The high, low and average market prices of our Equity Shares recorded on BSE and NSE during the preceding

three years and the number of our Equity Shares traded on the days of the high and low prices were recorded, are

as stated below:

BSE

Year High

(₹) Date of High

Volume on

date of High

(No. of Equity

Shares)

Low

(₹) Date of low

Volume on date of

Low

(No. of Equity

Shares)

Average

(₹)

April 1, 2019 -

March 31, 2020

434.00 June 3, 2019 108,625 143.80 March 30, 2020 268,433 348.89

April 1, 2018 -

March 31, 2019

527.75 April 30, 2018 81,151 355.70 October 19, 2018 183,466 450.22

April 1, 2017 -

March 31, 2018

507.85 January 23,

2018

218,073 295.75 May 24, 2017 120,219 408.41

(Source: www.bseindia.com)

NSE

Year High

(₹) Date of High

Volume on

date of High

(No. of Equity

Shares)

Low

(₹) Date of low

Volume on

date of Low

(No. of Equity

Shares)

Average (₹)

April 1, 2019 -

March 31, 2020

435.45 June 3, 2019 1,921,999 143.95 March 30, 2020 3,435,379 348.92

April 1, 2018 -

March 31, 2019

528.15 April 30,

2018

1,559,071 356.25 October 19, 2018 2,878,338 450.23

April 1, 2017 -

March 31, 2018

508.00 January 23,

2018

2,995,179 296.50 May 24, 2017 3,283,075 408.48

(Source: www.nseindia.com)

Monthly high and low prices and trading volumes on the Stock Exchanges for the six months preceding the date

of filing of this Letter of Offer are as stated below:

325

BSE

Month High

(₹) Date of High

Volume on date

of High (No. of

Equity Shares)

Low (₹) Date of low

Volume on

date of Low

(No. of Equity

Shares)

Average

price for

the month

(₹)

June, 2020 179.20 June 25, 2020 1,155,693 145.30 June 1, 2020 1,990,171 164.27

May, 2020 177.00 May 13, 2020 595,928 127.60 May 22, 2020 1,309,614 151.78

April, 2020 179.85 April 17, 2020 918,886 140.45 April 24, 2020 671,458 155.82

March, 2020 341.55 March 3, 2020 105,983 143.80 March 30,

2020

268,433 244.69

February, 2020 398.50 February 7,

2020

375,382 345.45 February 28,

2020

101,235 375.15

January, 2020 368.75 January 31,

2020

88,712 322.15 January 6,

2020

102,778 347.80


NSE

Month High

(₹) Date of High

Volume on date

of High (No. of

Equity Shares)

Low (₹) Date of low

Volume on

date of Low

(No. of Equity

Shares)

Average

price for

the month

(₹)

June, 2020 179.25 June 25, 2020 16,225,671 145.40 June 1, 2020 29,780,384 164.30

May, 2020 176.85 May 13, 2020 11,862,155 127.55 May 22, 2020 19,194,337 151.76

April, 2020 179.80 April 17, 2020 13,148,854 140.45 April 24, 2020 8,747,190 155.81

March, 2020 341.10 March 3, 2020 2,039,657 143.95 March 30,

2020

3,435,379 244.78

February, 2020 398.05 February 7,

2020

2,307,888 343.25 February 28,

2020

4,019,303 374.96

January, 2020 369.35 January 31,

2020

2,306,322 322.15 January 6,

2020

2,821,782 347.83


Week-end prices of Equity Shares along with the highest and lowest closing prices on the Stock Exchanges for

the last four weeks preceding the date of filing of this Letter of Offer is as stated below:

BSE

For the week ended on Closing Price (₹) High (₹) Date of High Low (₹) Date of Low

July 17, 2020 207.90 207.90 July 17, 2020 193.30 July 15, 2020

July 10, 2020 203.85 208.55 July 9, 2020 182.75 July 6, 2020

July 3, 2020 182.60 185.00 July 2, 2020 167.65 June 30, 2020

June 26, 2020 176.95 179.20 June 25, 2020 176.95 June 26, 2020


NSE

For the week ended on Closing Price (₹) High (₹) Date of High Low (₹) Date of Low

July 17, 2020 207.90 207.90 July 17, 2020 193.20 July 15, 2020

July 10, 2020 204.10 208.55 July 9, 2020 182.85 July 6, 2020

July 3, 2020 182.75 184.90 July 2, 2020 167.80 June 30, 2020

June 26, 2020 176.90 179.25 June 25, 2020 176.90 June 26, 2020


The closing market price of the Equity Shares of our Company one trading day prior to the date of this Letter of

Offer, that is on July 17, 2020 was ₹ 207.90 on BSE and ₹ 207.90 on NSE.

The Issue Price is ₹ 50 per Equity Share and has been arrived at by our Company in consultation with the Lead

Managers prior to the determination of the Record Date.

326

SECTION VI: LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND DEFAULTS

Our Company and our Subsidiaries are subject to various legal proceedings from time to time, primarily arising

in the ordinary course of business.

Except as disclosed below, there are no outstanding litigations with respect to (i) issues of moral turpitude or

criminal liability on the part of our Company and/or our Subsidiaries; (ii) material violations of statutory

regulations by our Company and/or our Subsidiaries; (iii) economic offences where proceedings have been

initiated against our Company and/or our Subsidiaries; (iv) any pending matters, which if they result in an adverse

outcome, would materially and adversely affect our operations or our financial position, determined in

accordance with the Materiality Policy.

In terms of our Company’s ‘Policy for Determination of Materiality of Events or Information’, framed in

accordance with Regulation 30 of the SEBI Listing Regulations, there is no outstanding litigation involving our

Company that has been disclosed to the Stock Exchanges and accordingly, there is no such outstanding litigation

involving our Company that requires disclosure in this Letter of Offer.

Solely for the purpose of the Issue, our Company has also disclosed in this section, if any, outstanding litigations,

including civil and tax proceedings, involving an amount equivalent to or in excess of 5% of the consolidated total

income of our Company, in terms of the Audited Consolidated Financial Statements, which is determined to be ₹

5,998.23 million. Pre-litigation notices received by our Company and/or our Subsidiaries from third parties

(excluding notices pertaining to any offence involving issues of moral turpitude, criminal liability, material

violations of statutory regulations or proceedings related to economic offences shall not be evaluated for

materiality until such time our Company and/or our Subsidiaries are impleaded as defendants in litigation

proceedings before any judicial forum.

Litigation involving our Company

Litigation against our Company

Criminal Proceedings

1. In the ordinary course of our business, our Company and our officials/employees are made parties to various

criminal proceedings primarily by various customers of our Company. These customers have availed loans

from our Company and have defaulted or have been delayed in repayment of outstanding loans. There are

190 outstanding criminal complaints and FIRs against our Company and/or its employees/officials alleging

inter alia (i) criminal breach of trust and cheating; (ii) forgery of loan documentation; (iii) trespass into private

property, robbery and causing hurt; (iv) illegal repossession of hypothecated assets; and (v) for criminal

intimidation, misbehaviour and harassment during the loan recovery process. These matters are presently

pending before various forums at various stages of adjudication.

Litigation involving our Subsidiaries

Litigation involving Mahindra Rural Housing Finance Limited

Litigation against Mahindra Rural Housing Finance Limited (“MRHFL”)

Criminal Proceedings

1. In the ordinary course of its business, MRHFL and its officials/employees are made parties to various criminal

proceedings primarily by various customers of MRHFL, who have availed loans from MRHFL and have

defaulted or have been delayed in repayment of outstanding loans. There are 16 outstanding criminal

complaints and FIRs against MRHFL and/or its employees/officials, alleging inter alia (i) misappropriation

and bribe by employees of MRHFL; (ii) abetment to suicide; (iii) beating and use of abusive language; and

(iv) harassment. These primarily include customers of MRHFL who have availed housing loans from

MRHFL and have defaulted or have been delayed in repayment of outstanding loans. These matters are

presently pending before various forums at various stages of adjudication.

327

GOVERNMENT APPROVALS

Our Company has obtained all material approvals, registrations, permits, consents and licenses (“Approvals”)

from governmental and regulatory authorities that are required for carrying on our present business activities.

As on the date of this Letter of Offer, there are no pending material Approvals required from governmental and

regulatory authorities, by our Company or our Material Subsidiary, to conduct their respective existing business

activities.

See “Risk Factors – We require certain statutory and regulatory approvals for conducting our business and our

inability to obtain, retain or renew them in a timely manner, or at all, may adversely affect our operations” on

page 32.

328

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for this Issue

This Issue has been authorised by a resolution of our Board passed at its meeting held on June 1, 2020, pursuant

to Section 62(1)(a) and other applicable provisions of the Companies Act, 2013.

Our Board in its meeting held on July 18, 2020 has resolved to issue Equity Shares to the Eligible Equity

Shareholders, at ₹ 50 per Equity Share (including a premium of ₹ 48 per Equity Share), in the ratio of one Equity

Share for every one Equity Share, as held on the Record Date. The Issue Price of ₹ 50 per Equity Share has been

arrived at, in consultation with the Lead Managers, prior to determination of the Record Date.

This Letter of Offer has been approved by our Board, at its meeting held on July 18, 2020 and our Rights Issue

Committee, at its meeting held on July 21, 2020.

Our Company has received in-principle approvals from BSE and NSE in accordance with Regulation 28(1) of the

SEBI Listing Regulations for listing of the Equity Shares to be Allotted in this Issue pursuant to their respective

letters dated July 15, 2020. Our Company will also make applications to BSE and NSE to obtain their trading

approvals for the Rights Entitlements as required under the SEBI Rights Issue Circulars.

Our Company has been allotted the ISIN ‘INE774D20016’ for the Rights Entitlements to be credited to the

respective demat accounts of the Eligible Equity Shareholders of our Company. For details, see “Terms of the

Issue” on page 338.

Prohibition by SEBI

Our Company, our Promoter, our Promoter Group or our Directors have not been and are not prohibited from

accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any

order or direction passed by SEBI.

Our Company, our Promoter, our Promoter Group or our Directors are not debarred from accessing the capital

market by SEBI.

The companies with which our Promoter or our Directors are associated as promoter or directors have not been

debarred from accessing the capital market by SEBI.

Neither our Promoter nor our Directors are declared as Fugitive Economic Offenders.

Association of our Directors with the securities market

None of our Directors are associated with the securities market.

Prohibition by RBI

Neither our Company, our Promoters nor our Directors have been or are identified as Wilful Defaulters.

Eligibility for the Issue

Our Company is a listed company and has been incorporated under the Companies Act, 1956. Our Equity Shares

are presently listed on the Stock Exchanges. Our Company is eligible to offer Equity Shares pursuant to this Issue

in terms of Chapter III of the SEBI ICDR Regulations and other applicable provisions of the SEBI ICDR

Regulations. Further, our Company is undertaking this Issue in compliance with Part B of Schedule VI of the

SEBI ICDR Regulations.

Compliance with Regulations 61 and 62 of the SEBI ICDR Regulations

Our Company is in compliance with the conditions specified in Regulations 61 and 62 of the SEBI ICDR

Regulations, to the extent applicable. Further, in relation to compliance with Regulation 62(1)(a) of the SEBI

ICDR Regulations, our Company has made applications to the Stock Exchanges and have received their in-

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principle approvals for listing of the Equity Shares to be issued pursuant to this Issue. BSE is the Designated Stock

Exchange for this Issue.

Compliance with conditions of “Fast Track” Issue

Our Company satisfies the following conditions specified in Regulation 99 of the SEBI ICDR Regulations read

with the SEBI circular, bearing reference no. SEBI/HO/CFD/CIR/CFD/DIL/ 67/2020 dated April 21, 2020, and

accordingly, our Company is eligible to make this Issue by way of a “fast track issue”:

1. Our Equity Shares have been listed on BSE and NSE, each being a recognized stock exchange having,

nationwide trading terminals, for a period of at least 18 months immediately preceding the date of filing

this Letter of Offer with the Designated Stock Exchange;

2. The entire shareholding of the members of the Promoter Group is held in dematerialized form as at the date

of filing this Letter of Offer with the Designated Stock Exchange: As on the date of this Letter of Offer,

members of our Promoter Group (other than our Promoter) do not hold any Equity Shares in our Company;

3. The average market capitalization of the public shareholding (as defined under the SEBI ICDR

Regulations) of our Company is at least ₹100 crores;

4. The annualized trading turnover of our Equity Shares during six calendar months immediately preceding

the month of filing of this Letter of Offer with the Designated Stock Exchange has been at least 2% of the

weighted average number of Equity Shares listed during such six-months period;

5. The annualized delivery-based trading turnover of our Equity Shares during six calendar months

immediately preceding the month of filing of this Letter of Offer with the Designated Stock Exchange has

been at least 10% of the annualized trading turnover of Equity Shares during such six-month period;

6. Our Company has been in compliance with the equity listing agreement and the SEBI Listing Regulations,

for a period of at 18 months immediately preceding the date of filing this Letter of Offer with the Designated

Stock Exchange;

7. Our Company has redressed at least 95% of the complaints received from the investors until the end of the

quarter immediately preceding the month at the date of filing this Letter of Offer with the Designated Stock

Exchange;

8. No show-cause notices, excluding under adjudication proceedings, have been issued by SEBI and pending

against our Company or our Promoter or whole-time Directors as at the date of filing this Letter of Offer

with SEBI, the Designated Stock Exchange and NSE. Further, there are no prosecution proceedings

initiated, or show cause notices in adjudication proceedings which have been issued, by SEBI, and which

are pending against our Company, Promoter, Directors or Group Companies as at the date of filing this

Letter of Offer with SEBI, the Designated Stock Exchange and NSE, which have not been disclosed in this

Letter of Offer, along with potential adverse impact on our Company.

9. Our Company, our Promoter, the members of the Promoter Group or our Directors have not settled any

alleged violation of securities laws through the consent or settlement mechanism with SEBI;

10. Our Equity Shares have not been suspended from trading as a disciplinary measure during 18 months

immediately preceding the date of filing this Letter of Offer with the Designated Stock Exchange;

11. There are no conflicts of interest between the Lead Managers and our Company or the Group Companies,

in accordance with applicable regulations;

12. Our Promoter shall mandatorily subscribe to its Rights Entitlements and shall not renounce its Rights

Entitlements. For subscription by our Promoter and details in relation to compliance with minimum public

shareholding norms prescribed under the Securities Contracts (Regulation) Rules, 1957, see “Capital

Structure – Subscription to this Issue by the Promoter and the Promoter Group” on page 82. As on the

date of this Letter of Offer, members of our Promoter Group (other than our Promoter) do not hold any

Equity Shares in our Company; and

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13. There are no audit qualifications on the audited accounts of our Company in respect of the Fiscal for which

such accounts are disclosed in this Letter of Offer.

Compliance with Clause (1) of Part B of Schedule VI of the SEBI ICDR Regulations

Our Company is in compliance with the provisions specified in Clause (1) of Part B of Schedule VI of the SEBI

ICDR Regulations as explained below:

1. Our Company has been filing periodic reports, statements and information in compliance with the SEBI

Listing Regulations, as applicable for the last three years immediately preceding the date of filing of this

Letter of Offer with SEBI;

2. The reports, statements and information referred to above are available on the websites of BSE and NSE;

and

3. Our Company has an investor grievance-handling mechanism which includes meeting of the Stakeholders’

Relationship Committee at frequent intervals, appropriate delegation of power by our Board as regards

share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor

grievances.

As our Company satisfies the conditions specified in Clause (1) of Part B of Schedule VI of SEBI ICDR

Regulations, and given that the conditions specified in Clause (3) of Part B of Schedule VI of SEBI ICDR

Regulations are not applicable to our Company, the disclosures in this Letter of Offer are in terms of Clause (5)

of Part B of Schedule VI of the SEBI ICDR Regulations. Our Company is also in compliance with Clause (6) of

Part B of Schedule VI of the SEBI ICDR Regulations.

DISCLAIMER CLAUSE OF SEBI

IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE LETTER OF OFFER

TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN

CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR

THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS

PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR

OPINIONS EXPRESSED IN THIS LETTER OF OFFER. THE LEAD MANAGERS, BEING KOTAK

MAHINDRA CAPITAL COMPANY LIMITED, AXIS CAPITAL LIMITED, BNP PARIBAS,

CITIGROUP GLOBAL MARKETS INDIA PRIVATE LIMITED, HDFC BANK LIMITED, HSBC

SECURITIES AND CAPITAL MARKETS (INDIA) PRIVATE LIMITED, ICICI SECURITIES

LIMITED, NOMURA FINANCIAL ADVISORY AND SECURITIES (INDIA) PRIVATE LIMITED AND

SBI CAPITAL MARKETS LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THIS

LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE

REQUIREMENTS) REGULATIONS, 2018, AS AMENDED (“SEBI ICDR REGULATIONS”) IN FORCE

FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN

INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER IS PRIMARILY

RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT

INFORMATION IN THE LETTER OF OFFER, THE LEAD MANAGES ARE EXPECTED TO

EXERCISE DUE DILIGENCE TO ENSURE THAT THE ISSUER DISCHARGES ITS

RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD

MANAGERS, BEING KOTAK MAHINDRA CAPITAL COMPANY LIMITED, AXIS CAPITAL

LIMITED, BNP PARIBAS, CITIGROUP GLOBAL MARKETS INDIA PRIVATE LIMITED, HDFC

BANK LIMITED, HSBC SECURITIES AND CAPITAL MARKETS (INDIA) PRIVATE LIMITED,

ICICI SECURITIES LIMITED, NOMURA FINANCIAL ADVISORY AND SECURITIES (INDIA)

PRIVATE LIMITED AND SBI CAPITAL MARKETS LIMITED HAVE FURNISHED TO SEBI A DUE

DILIGENCE CERTIFICATE DATED JULY 21, 2020, WHICH READS AS FOLLOWS:

(1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO

LITIGATION, INCLUDING COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES

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WITH COLLABORATORS, ETC. AND OTHER MATERIAL WHILE FINALISING THE

LETTER OF OFFER DATED JULY 21, 2020 PERTAINING TO THE ISSUE;

(2) ON THE BASIS OF SUCH EXAMINATION AND DISCUSSIONS WITH THE COMPANY, ITS

DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT

VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE,

PRICE JUSTIFICATION, CONTENTS OF THE DOCUMENTS AND OTHER PAPERS

FURNISHED BY THE COMPANY, WE CONFIRM THAT:

(a) THE LETTER OF OFFER FILED WITH SEBI IS IN CONFORMITY WITH THE

DOCUMENTS, MATERIALS AND PAPERS WHICH ARE MATERIAL TO THE ISSUE;

(b) ALL MATERIAL LEGAL REQUIREMENTS RELATING TO THE ISSUE AS SPECIFIED

BY SEBI, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT

AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

(c) THE MATERIAL DISCLOSURES MADE IN THE LETTER OF OFFER ARE TRUE AND

ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED

DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH

DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE

COMPANIES ACT, 2013, THE SEBI ICDR REGULATIONS AND OTHER APPLICABLE

LEGAL REQUIREMENTS.

(3) BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE LETTER OF OFFER

ARE REGISTERED WITH SEBI AND THAT UNTIL DATE SUCH REGISTRATION IS VALID.

COMPLIED WITH.

(4) WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS

TO FULFIL THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE

(5) WRITTEN CONSENT FROM THE PROMOTER HAS BEEN OBTAINED FOR INCLUSION OF

HIS SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTER’S

CONTRIBUTION SUBJECT TO LOCK-IN AND THE EQUITY SHARES PROPOSED TO FORM

PART OF PROMOTER’S CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE

DISPOSED OR SOLD OR TRANSFERRED BY THE PROMOTER DURING THE PERIOD

STARTING FROM THE DATE OF FILING THE LETTER OF OFFER WITH SEBI UNTIL THE

DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE LETTER OF

OFFER. – NOT APPLICABLE.

(6) ALL APPLICABLE PROVISONS OF SEBI ICDR REGULATIONS, WHICH RELATE TO

EQUITY SHARES INELIGIBLE FOR COMPUTATION OF PROMOTER’S CONTRIBUTION,

HAVE BEEN AND SHALL BE DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES

AS TO COMPLIANCE WITH THE SAID REGULATION(S) HAVE BEEN MADE IN THE

LETTER OF OFFER. – NOT APPLICABLE.

(7) ALL APPLICABLE PROVISONS OF SEBI ICDR REGULATIONS, WHICH RELATE TO

RECEIPT OF PROMOTER’S CONTRIBUTION PRIOR TO OPENING OF THE ISSUE, SHALL

BE COMPLIED WITH. ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT

PROMOTER’S CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE

OPENING OF THE ISSUE AND THE STATUTORY AUDITOR’S CERTIFICATE TO THIS

EFFECT SHALL BE DULY SUBMITTED TO SEBI. WE FURTHER CONFIRM THAT

ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTER’S CONTRIBUTION

SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK

AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE

ISSUE. – NOT APPLICABLE.

(8) NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONIES

RECEIVED PURSUANT TO THE ISSUE ARE CREDITED OR TRANSFERRED TO A

SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION

40 OF THE COMPANIES ACT, 2013 AND THAT SUCH MONIES SHALL BE RELEASED BY

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THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK

EXCHANGES, AND THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS

TO THE ISSUE AND THE COMPANY SPECIFICALLY CONTAINS THIS CONDITION –

NOTED FOR COMPLIANCE TO THE EXTENT APPLICABLE

(9) THE EXISTING BUSINESS AS WELL AS ANY NEW BUSINESS OF THE COMPANY FOR

WHICH THE FUNDS ARE BEING RAISED FALL WITHIN THE ‘MAIN OBJECTS’ IN THE

OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OF THE COMPANY AND

THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED IN LAST TEN YEARS ARE VALID

IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

COMPLIED WITH TO THE EXTENT APPLICABLE

(10) FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE LETTER OF OFFER:

(a) AN UNDERTAKING FROM THE COMPANY THAT AT ANY GIVEN TIME, THERE

SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE

COMPANY, EXCLUDING SUPERIOR EQUITY SHARES, WHERE AN ISSUER HAS

OUTSTANDING SUPERIOR EQUITY SHARES – COMPLIED WITH (THE COMPANY

HAS NOT ISSUED ANY SUPERIOR EQUITY SHARES); AND

(b) AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY WITH ALL

DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY SEBI. COMPLIED WITH

(11) WE SHALL COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENTS IN

TERMS OF THE SEBI ICDR REGULATIONS. NOTED FOR COMPLIANCE INCLUDING

WITH THE SEBI CIRCULAR SEBI/HO/CFD/DIL2/CIR/P/2020/78 DATED MAY 6, 2020.

(12) IF APPLICABLE, THE COMPANY IS ELIGIBLE TO LIST ON THE INNOVATORS GROWTH

IN TERMS OF THE PROVISIONS CHAPTER X OF THE SEBI ICDR REGULATIONS. NOT

APPLICABLE

(13) NONE OF THE INTERMEDIARIES NAMED IN THIS LETTER OF OFFER HAVE BEEN

DEBARRED FROM FUNCTIONING BY ANY REGULATORY AUTHORITY– COMPLIED

WITH.

(14) THE COMPANY IS ELIGIBLE TO MAKE A FAST TRACK ISSUE IN TERMS OF

REGULATION 99 OF THE SEBI ICDR REGULATIONS READ WITH THE SEBI CIRCULAR

SEBI/HO/CFD/DIL2/CIR/P/2020/78 DATED MAY 6, 2020. THE FULFILMENT OF THE

ELIGIBILITY CRITERIA AS SPECIFIED IN THAT REGULATION AND THE SEBI

CIRCULAR SEBI/HO/CFD/DIL2/CIR/P/2020/78 DATED MAY 6, 2020 BY THE COMPANY HAS

ALSO BEEN DISCLOSED IN THIS LETTER OF OFFER– COMPLIED WITH.

(15) THE ABRIDGED LETTER OF OFFER CONTAINS ALL DISCLOSURES AS SPECIFIED IN

THE SEBI ICDR REGULATIONS – COMPLIED WITH.

(16) ALL MATERIAL DISCLOSURES IN RESPECT OF THE COMPANY HAVE BEEN MADE IN

THIS LETTER OF OFFER AND CERTIFY THAT ANY MATERIAL DEVELOPMENT IN THE

COMPANY OR RELATING TO THE COMPANY UP TO THE COMMENCEMENT OF

LISTING AND TRADING OF THE EQUITY SHARES OFFERED THROUGH THIS ISSUE

SHALL BE INFORMED THROUGH PUBLIC NOTICES/ADVERTISEMENTS IN ALL THOSE

NEWSPAPERS IN WHICH PRE-ISSUE ADVERTISEMENT AND ADVERTISEMENT FOR

OPENING OR CLOSURE OF THE ISSUE HAVE BEEN GIVEN – COMPLIED WITH AND

NOTED FOR COMPLIANCE.

(17) AGREEMENTS HAVE BEEN ENTERED INTO WITH THE DEPOSITORIES FOR

DEMATERIALISATION OF THE SPECIFIED SECURITIES OF THE COMPANY – COMPLIED

WITH.

THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM

ANY LIABILITIES UNDER THE COMPANIES ACT, 2013 OR FROM THE REQUIREMENT OF

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OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE

PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT

ANY POINT OF TIME, WITH THE LEAD MANAGERS ANY IRREGULARITIES OR LAPSES IN THE

LETTER OF OFFER.

Disclaimer clauses from our Company and the Lead Managers

Our Company and the Lead Managers accept no responsibility for statements made otherwise than in this Letter

of Offer or in any advertisement or other material issued by our Company or by any other persons at the instance

of our Company and anyone placing reliance on any other source of information would be doing so at their own

risk.

Investors who invest in this Issue will be deemed to have represented to our Company and the Lead Managers

and their respective directors, officers, agents, affiliates and representatives that they are eligible under all

applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares, and are relying on

independent advice / evaluation as to their ability and quantum of investment in this Issue.

Caution

Our Company and the Lead Managers shall make all relevant information available to the Eligible Equity

Shareholders in accordance with the SEBI ICDR Regulations and no selective or additional information would be

available for a section of the Eligible Equity Shareholders in any manner whatsoever, including at presentations,

in research or sales reports, etc., after filing this Letter of Offer.

No dealer, salesperson or other person is authorised to give any information or to represent anything not contained

in this Letter of Offer. You must not rely on any unauthorised information or representations. This Letter of Offer

is an offer to sell only the Equity Shares and rights to purchase the Equity Shares offered hereby, but only under

circumstances and in jurisdictions where it is lawful to do so. The information contained in this Letter of Offer is

current only as of its date.

Disclaimer with respect to jurisdiction

This Letter of Offer has been prepared under the provisions of Indian laws and the applicable rules and regulations

thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in

Mumbai, India only.

Designated Stock Exchange

The Designated Stock Exchange for the purpose of this Issue is BSE.

Disclaimer Clause of BSE

As required, a copy of this Letter of Offer has been submitted to BSE. The Disclaimer Clause as intimated by

BSE to us, post scrutiny of this Letter of Offer is set out below:

“BSE Limited (the “Exchange”) has given, vide its letter dated July 15, 2020 permission to this Company to use

the Exchange’s name in this Letter of Offer as one of the stock exchanges on which this Company’s securities are

proposed to be listed. The Exchange has scrutinized this Letter of Offer for its limited internal purpose of deciding

on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner:

• Warrant, certify or endorse the correctness or completeness of any of the contents of this letter of offer; or

• Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or

• Take any responsibility for the financial or other soundness of this Company, its promoters, its management

or any scheme or project of this Company;

and it should not for any reason be deemed or construed that this letter of offer has been cleared or approved by

the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may

do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the

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Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection

with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any

other reason whatsoever.”

Disclaimer Clause of NSE

As required, a copy of this letter of offer has been submitted to NSE. The Disclaimer Clause as intimated by the

NSE to us, post scrutiny of this Letter of Offer is set out below:

“As required, a copy of this letter of offer has been submitted to National Stock Exchange of India Limited

(hereinafter referred to as NSE). NSE has given vide its letter Ref. No. NSE/LIST/24207 dated July 15, 2020

permission to the Issuer to use the Exchange’s name in this letter of offer as one of the stock exchanges on which

this Issuer’s securities are proposed to be listed. The Exchange has scrutinized this letter of offer for its limited

internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer.

It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or

construed that the letter of offer has been cleared or approved by NSE; nor does it in any manner warrant, certify

or endorse the correctness or completeness of any of the contents of this letter of offer; nor does it warrant that

this Issuer’s securities will be listed or will continue to be listed on the Exchange; nor does it take any

responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or

project of this Issuer.

Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to

independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by

reason of any loss which may be suffered by such person consequent to or in connection with such subscription

/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. ”

Disclaimer Clause of RBI

The Company has a valid certificate of registration dated September 4, 1998 issued by the RBI under Section 45

IA of the RBI Act. However, the RBI does not accept any responsibility or guarantee about the present position

as to the financial soundness of the Company or for the correctness of any of the statements or representations

made or opinions expressed by the Company and for repayment of deposits /discharge of liabilities by the

Company.

Selling Restrictions

The distribution of this Letter of Offer, the Abridged Letter of Offer, the Application Form, the Rights Entitlement

Letter and the issue of Rights Entitlements and Equity Shares on a rights basis to persons in certain jurisdictions

outside India is restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession

this Letter of Offer, the Abridged Letter of Offer, the Application Form and the Rights Entitlement Letter may

come are required to inform themselves about and observe such restrictions.

This Letter of Offer and its accompanying documents is being supplied to you solely for your information

and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or

published, in whole or in part, for any purpose.

Our Company is making this Issue on a rights basis to the Eligible Equity Shareholders (i) in offshore

transactions outside the United States in compliance with Regulation S to existing shareholders located in

jurisdictions where such offer and sale of the Equity Shares is permitted under laws of such jurisdictions

and (ii) in the United States to U.S. QIBs pursuant to Section 4(a)(2) of the US Securities Act. Our Company

will dispatch this Letter of Offer / Abridged Letter of Offer and Application Form only to Eligible Equity

Shareholders who have provided an Indian address to our Company and located in jurisdictions where the

offer and sale of the Equity Shares may be permitted under laws of such jurisdictions.

The Equity Shares and Rights Entitlements may not be offered or sold, directly or indirectly, and none of this

Letter of Offer, the Abridged Letter of Offer, Application Forms, the Rights Entitlement Letter or any offering

materials or advertisements in connection with the Equity Shares or Rights Entitlements may be distributed or

published in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. No

action has been or will be taken to permit this Issue in any jurisdiction, or the possession, circulation, or

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distribution of this Letter of Offer, the Abridged Letter of Offer, the Application Forms, the Rights Entitlement

Letter or any other material relating to our Company, the Equity Shares or Rights Entitlements in any jurisdiction,

where any action would be required in such jurisdiction for that purpose.

Receipt of this Letter of Offer, the Abridged Letter of Offer, the Application Forms and the Rights Entitlement

Letter will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer. If this

Letter of Offer is received by any person in any jurisdiction where to do so would or might contravene local

securities laws or regulation, or by their agent or nominee, they must not seek to subscribe to the Equity Shares

or the Rights Entitlements referred to in this Letter of Offer.

Investors are advised to consult their legal counsel prior to applying for the Rights Entitlements and Equity Shares

or accepting any provisional allotment of Equity Shares, or making any offer, sale, resale, pledge or other transfer

of the Equity Shares or Rights Entitlements.

Neither the delivery of this Letter of Offer nor any sale hereunder, shall under any circumstances create any

implication that there has been no change in our Company’s affairs from the date hereof or the date of such

information or that the information contained herein is correct as of any time subsequent to this date or the date

of such information.

NOTICE TO INVESTORS IN THE UNITED STATES

THE RIGHTS ENTITLEMENTS AND THE EQUITY SHARES HAVE NOT BEEN AND WILL NOT BE

REGISTERED UNDER THE US SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS AND MAY

NOT BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES,

EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE US

SECURITIES ACT. THE EQUITY SHARES REFERRED TO IN THIS LETTER OF OFFER ARE BEING

OFFERED AND SOLD (I) IN OFFSHORE TRANSACTIONS OUTSIDE THE UNITED STATES IN

COMPLIANCE WITH REGULATION S TO EXISTING SHAREHOLDERS LOCATED IN JURISDICTIONS

WHERE SUCH OFFER AND SALE OF THE EQUITY SHARES IS PERMITTED UNDER LAWS OF SUCH

JURISDICTIONS AND (II) IN THE UNITED STATES TO U.S. QIBs PURSUANT TO SECTION 4(a)(2) OF

THE US SECURITIES ACT. THE OFFERING TO WHICH THIS LETTER OF OFFER RELATES IS NOT,

AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF ANY EQUITY

SHARES OR RIGHTS ENTITLEMENTS FOR SALE IN THE UNITED STATES OR AS A SOLICITATION

THEREIN OF AN OFFER TO BUY ANY OF THE SAID SECURITIES, EXCEPT IN EACH CASE TO

PERSONS IN THE UNITED STATES WHO ARE U.S. QIBs.

Neither our Company, nor any person acting on behalf of our Company, will accept a subscription or renunciation

from any person, or the agent of any person, who appears to be, or who our Company, or any person acting on

behalf of our Company, has reason to believe is, in the United States when the buy order is made (other than

persons in the United States who are U.S. QIBs). No Application Form should be postmarked in the United States,

electronically transmitted from the United States or otherwise dispatched from the United States (in each case,

other than from persons in the United States who are U.S. QIBs) or from any other jurisdiction where it would be

illegal to make an offer of securities under this Letter of Offer. Our Company is undertaking this Issue on a rights

basis to the Eligible Equity Shareholders and will send/ dispatch the Abridged Letter of Offer, the Application

Form, the Rights Entitlement Letter and other Issue material (i) only to e-mail addresses of resident Eligible Equity






be permitted under laws of such jurisdictions.

Any person who acquires Rights Entitlements or Equity Shares will be deemed to have declared, warranted and

agreed, by accepting the delivery of this Letter of Offer, that (i) it is not and that at the time of subscribing for the

Equity Shares or the Rights Entitlements, it will not be, in the United States, or (ii) it is a U.S.QIB in the United

States, and, in each case is authorized to acquire the Rights Entitlements and the Equity Shares in compliance with

all applicable laws and regulations.

Our Company, reserves the right to treat as invalid any Application Form which: (i) appears to our Company or

its agents to have been executed in, electronically transmitted from or dispatched from the United States (unless

the Application Form is submitted by a U.S. QIB in the United States) or other jurisdictions where the offer and

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sale of the Equity Shares is not permitted under laws of such jurisdictions; (ii) does not include the relevant

certifications set out in the Application Form, including to the effect that the person submitting and/or renouncing

the Application Form is (a) outside India and the United States and is a foreign corporate or institutional

shareholders eligible to subscribe for the Equity Shares under applicable securities laws or (b) a U.S. QIB in the

United States, and in each case such person is complying with laws of jurisdictions applicable to such person in

connection with this Issue and have obtained requisite approvals before applying in this Issue; or (iii) where either

a registered Indian address is not provided or our Company believes acceptance of such Application Form may

infringe applicable legal or regulatory requirements; and our Company shall not be bound to issue or allot any

Equity Shares in respect of any such Application Form.

NOTICE TO INVESTORS

NO ACTION HAS BEEN TAKEN OR WILL BE TAKEN THAT WOULD PERMIT A PUBLIC OFFERING OF

THE RIGHTS ENTITLEMENTS OR EQUITY SHARES TO OCCUR IN ANY JURISDICTION OTHER THAN

INDIA, OR THE POSSESSION, CIRCULATION OR DISTRIBUTION OF THIS LETTER OF OFFER OR ANY

OTHER MATERIAL RELATING TO OUR COMPANY, THE RIGHTS ENTITLEMENTS OR THE EQUITY

SHARES IN ANY JURISDICTION WHERE ACTION FOR SUCH PURPOSE IS REQUIRED.

ACCORDINGLY, THE RIGHTS ENTITLEMENTS OR EQUITY SHARES MAY NOT BE OFFERED OR

SOLD, DIRECTLY OR INDIRECTLY, AND NEITHER THIS LETTER OF OFFER NOR ANY OFFERING

MATERIALS OR ADVERTISEMENTS IN CONNECTION WITH THE RIGHTS ENTITLEMENTS OR

EQUITY SHARES MAY BE DISTRIBUTED OR PUBLISHED IN OR FROM ANY COUNTRY OR

JURISDICTION EXCEPT IN ACCORDANCE WITH THE LEGAL REQUIREMENTS APPLICABLE IN

SUCH COUNTRY OR JURISDICTION. THIS ISSUE WILL BE MADE IN COMPLIANCE WITH THE

APPLICABLE SEBI REGULATIONS. EACH PURCHASER OF THE RIGHTS ENTITLEMENTS OR THE

EQUITY SHARES IN THIS ISSUE WILL BE DEEMED TO HAVE MADE ACKNOWLEDGMENTS AND

AGREEMENTS AS DESCRIBED UNDER “RESTRICTIONS ON PURCHASES AND RESALES”.

Filing

This Letter of Offer is being filed with the Designated Stock Exchange, NSE and SEBI, as per the provisions of

the SEBI ICDR Regulations. Further, in terms of the SEBI ICDR Regulations, our Company will simultaneously

while filing this Letter of Offer with the Designated Stock Exchange, submit a copy of this Letter of Offer to

SEBI, at SEBI Bhawan, Plot No. C4-A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051,

Maharashtra, India and do an online filing with SEBI through the SEBI intermediary portal at

https://siportal.sebi.gov.in in terms of the circular (No. SEBI/HO/CFD/DIL1/CIR/P/2018/011) dated January 19,

2018 issued by SEBI. Further, in light of the SEBI notification dated March 27, 2020, our Company will submit

a copy of this Letter of Offer to the email address: [email protected].

Investor Grievances and Redressal System

Our Company has adequate arrangements for the redressal of investor complaints in compliance with the corporate

governance requirements under the Listing Agreement.

Our Company has a Stakeholders’ Relationship Committee which currently comprises Rama Bijapurkar

(chairperson), Ramesh Iyer, V. Ravi and Chandrashekhar Bhaskar Bhave. The terms of reference, inter alia,

include redressal of investors’/ shareholder’/ security holders’ complaints pertaining to transfer of securities, non-

receipt of annual reports, non-receipt of declared dividend, issue of duplicate certificates, and to carry out any

other function as is mandated by the Board from time to time and/or enforced by any statutory modification,

amendment or modifications as may be applicable. We have been registered with the SEBI Complaints Redress

System (SCORES) as required by the SEBI Circular no. CIR/OIAE/2/2011 dated June 3, 2011. Consequently,

investor grievances are tracked online by our Company. The Investor complaints received by our Company are

generally disposed of within 10 days from the date of receipt of the complaint.

Investors may contact the Registrar or our Company Secretary and Compliance Officer for any pre Issue

or post Issue related matter. All grievances relating to the ASBA process or R-WAP process may be

addressed to the Registrar, with a copy to the SCSBs(in case of ASBA process), giving full details such as

name, address of the Applicant, contact number(s), e mail address of the sole/ first holder, folio number

(for physical shareholders) or demat account number, number of Equity Shares applied for, amount

blocked (in case of ASBA process) or amount debited (in case of R-WAP process), ASBA Account/Bank

Account number and the Designated Branches of the SCSBs where the Application Form or the plain paper

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application, as the case may be, was submitted by the Investors along with a photocopy of the

acknowledgement slip (in case of ASBA process), and copy of the e-acknowledgement (in case of R-WAP

process). For details on the ASBA process and R-WAP process, see “Terms of the Issue” on page 338. The

contact details of Registrar to the Issue and our Company Secretary & Compliance Officer are as follows:

Registrar to the Issue



Selenium, Tower B

Plot No- 31 and 32, Financial District


Hyderabad, Rangareddi 500 032, Telangana, India

Telephone: +91 (40) 6716 2222

Toll Free Numbers: 18004258998/18003454001



Contact Person: M Murali Krishna



Company Secretary and Compliance Officer

Arnavaz M. Pardiwalla

4th Floor, A Wing, Mahindra Towers, Dr. G. M. Bhosale Marg

P. K. Kurne Chowk, Worli

Mumbai 400 018

Maharashtra

Telephone: +91 (22) 6652 6000


In accordance with SEBI Rights Issue Circulars, frequently asked questions and online/ electronic dedicated

investor helpdesk for guidance on the Application process and resolution of difficulties faced by the Investors will

be available on the website of the Registrar (https://rights.kfintech.com/mahindra). Further, helpline numbers

provided by the Registrar for guidance on the Application process and resolution of difficulties are:

18004258998/18003454001.



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SECTION VII: ISSUE INFORMATION

TERMS OF THE ISSUE

This section is for the information of the Investors proposing to apply in this Issue. Investors should carefully read

the provisions contained in this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter and the

Application Form, before submitting the Application Form. Our Company and the Lead Managers are not liable

for any amendments or modifications or changes in applicable laws or regulations, which may occur after the

date of this Letter of Offer. Investors are advised to make their independent investigation and ensure that the

Application Form is correctly filled up. Unless otherwise permitted under the SEBI ICDR Regulations read with

SEBI Rights Issue Circulars, Investors proposing to apply in this Issue can apply only through ASBA or by

mechanism as disclosed in this section.

OVERVIEW

This Issue and the Equity Shares proposed to be issued on a rights basis, are subject to the terms and conditions

contained in this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter, the Application

Form, and the Memorandum of Association and the Articles of Association of our Company, the provisions of

the Companies Act, 2013, FEMA, FEMA Rules, the SEBI ICDR Regulations, the SEBI Listing Regulations, and

the guidelines, notifications and regulations issued by SEBI, the Government of India and other statutory and

regulatory authorities from time to time, approvals, if any, from RBI or other regulatory authorities, the terms of

the Listing Agreements entered into by our Company with the Stock Exchanges and the terms and conditions as

stipulated in the Allotment advice.

Important:

1. Dispatch and availability of Issue materials:

In accordance with the SEBI ICDR Regulations, SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2020/78

dated May 6, 2020 and the MCA Circular, our Company will send/ dispatch the Abridged Letter of Offer,

the Application Form, the Rights Entitlement Letter and other Issue material (i) only to e-mail addresses

of resident Eligible Equity Shareholders who have provided their e-mail addresses; (ii) only to the Indian

addresses of the resident Eligible Equity Shareholders, on a reasonable effort basis. whose e-mail

addresses are not available with the Company or the Eligible Equity Shareholders have not provided

the valid e-mail address to the Company; (iii) only to the Indian addresses of the non-resident Eligible

Equity Shareholders, on a reasonable effort basis, who have provided an Indian address to our Company

and located in jurisdictions where the offer and sale of the Equity Shares may be permitted under laws

of such jurisdictions. Further, this Letter of Offer will be sent/ dispatched (i) only to e-mail addresses of

resident Eligible Equity Shareholders who have provided their e-mail addresses; (ii) only to the Indian

addresses of the resident Eligible Equity Shareholders, on a reasonable effort basis. whose e-mail

addresses are not available with the Company or the Eligible Equity Shareholders have not provided

the valid e-mail address to the Company; (iii) only to the Indian addresses of the non-resident Eligible

Equity Shareholders, on a reasonable effort basis, who have provided an Indian address to our Company

and located in jurisdictions where the offer and sale of the Equity Shares may be permitted under laws

of such jurisdictions, by the Registrar on behalf of our Company or the Lead Managers, in each case who

make a request in this regard.

Investors can access this Letter of Offer, the Abridged Letter of Offer, the Application Form, statutory

advertisement, corrigendum, if applicable (provided that the Eligible Equity Shareholder is eligible to

subscribe for the Equity Shares under applicable securities laws) on the websites of:

(i) our Company at www.mahindrafinance.com;

(ii) the Registrar at https://rights.kfintech.com/mahindra;

(iii) the Lead Managers, i.e., (a) Kotak Mahindra Capital Company Limited at

www.investmentbank.kotak.com; (b) Axis Capital Limited at www.axiscapital.co.in, (c) BNP

Paribas at www.bnpparibas.co.in, (d) Citigroup Global Markets India Private Limited at

www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm, (e) HDFC Bank Limited at

www.hdfcbank.com, (f) HSBC Securities and Capital Markets (India) Private Limited at


http://www.investmentbank.kotak.com/

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https://www.business.hsbc.co.in/en-gb/in/generic/ipo-open-offer-and-buyback, (g) ICICI

Securities Limited at www.icicisecurities.com, (h) Nomura Financial Advisory and Securities

(India) Private Limited at www.nomuraholdings.com/company/ group/asia/india/index.html,

and (I) SBI Capital Markets Limited at www.sbicaps.com;

(iv) the Stock Exchanges at www.bseindia.com and www.nseindia.com; and

(v) the Registrar’s web-based application platform at https://rights.kfintech.com/mahindra (“R-

WAP”).

Eligible Equity Shareholders can obtain the details of their respective Rights Entitlements from the

website of the Registrar (i.e., https://rights.kfintech.com/mahindra) by entering their DP ID and Client

ID or Folio Number (in case of Eligible Equity Shareholders holding Equity Shares in physical form)

and PAN. The link for the same shall also be available on the website of our Company (i.e.,

www.mahindrafinance.com).

Further, our Company along with the Lead Managers will undertake all adequate steps to reach out the

Eligible Equity Shareholders who have provided their Indian address through other means, as may be

feasible. Our Company, the Lead Managers and the Registrar will not be liable for non-dispatch of

physical copies of Issue materials, including this Letter of Offer, the Abridged Letter of Offer, the Rights

Entitlement Letter and the Application Form, or delay in the receipt of this Letter of Offer, the Abridged

Letter of Offer, the Rights Entitlement Letter or the Application Form attributable to non-availability of

the e-mail addresses of Eligible Equity Shareholders or electronic transmission delays or failures, or if

the Application Forms or the Rights Entitlement Letters are delayed or misplaced in transit.

2. Facilities for Application in this Issue:

In accordance with Regulation 76 of the SEBI ICDR Regulations, SEBI Rights Issue Circulars and

ASBA Circulars, all Investors desiring to make an Application in this Issue are mandatorily

required to use either the ASBA process or the optional mechanism instituted only for resident

Investors in this Issue, i.e., R-WAP (instituted only for resident Investors in this Issue). Investors

should carefully read the provisions applicable to such Applications before making their

Application through ASBA or using the R-WAP. For details, see “- Procedure for Application

through the ASBA Process” and “- Procedure for Application through the R-WAP” on page 350.

(a) ASBA facility: Investors can submit either the Application Form in physical mode to the

Designated Branches of the SCSBs or online/ electronic Application through the website of the

SCSBs (if made available by such SCSB) authorizing the SCSB to block the Application Money

in an ASBA Account maintained with the SCSB. Application through ASBA facility in electronic

mode will only be available with such SCSBs who provide such facility.

Investors should note that the ASBA process involves procedures that are different from the

procedure under the R-WAP process. Investors applying through the ASBA facility should

carefully read the provisions applicable to such Applications before making their Application

through the ASBA process. For details, see “- Procedure for Application through the ASBA

Process” on page 350.

Please note that subject to SCSBs complying with the requirements of SEBI Circular

CIR/CFD/DIL/13/2012 dated September 25, 2012, within the periods stipulated therein,

Applications may be submitted at the Designated Branches of the SCSBs.

Further, in terms of the SEBI Circular CIR/CFD/DIL/1/2013 dated January 2, 2013, it is clarified

that for making Applications by SCSBs on their own account using ASBA facility, each such

SCSB should have a separate account in its own name with any other SEBI registered SCSB(s).

Such account shall be used solely for the purpose of making an Application in this Issue and clear

demarcated funds should be available in such account for such an Application.

(b) Registrar’s Web-based Application Platform (R-WAP):

In accordance with SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020, a

separate web based application platform, i.e., the R-WAP facility (accessible at

http://www.nseindia.com/



340

https://rights.kfintech.com/mahindra), has been instituted for making an Application in this Issue

by resident Investors. Further, R-WAP is only an additional option and not a replacement of the

ASBA process. At the R-WAP, resident Investors can access and submit the online Application

Form in electronic mode using the R-WAP and make online payment using their internet banking

or UPI facility from their own bank account thereat.

PLEASE NOTE THAT ONLY RESIDENT INDIVIDUAL INVESTORS CAN SUBMIT AN

APPLICATION USING THE R-WAP. R-WAP FACILITY WILL BE OPERATIONAL

FROM THE ISSUE OPENING DATE. FOR RISKS ASSOCIATED WITH THE R-WAP

PROCESS, SEE “RISK FACTORS” ON PAGE 20.

For guidance on the Application process through R-WAP and resolution of difficulties faced by

the Investors, the Investors are advised to carefully read the frequently asked questions, visit the

online/ electronic dedicated investor helpdesk (https://rights.kfintech.com/mahindra) or call toll-

free helpline numbers (18004258998 and 18003454001). For details, see “- Procedure for

Application through the R-WAP” on page 350.

In accordance with SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020, our

Company will make use of advertisements in television channels, radio, internet etc., including in

the form of crawlers/ tickers, to disseminate information relating to the Application process in

India.

3. Credit of Rights Entitlements in demat accounts of Eligible Equity Shareholders

In accordance with Regulation 77A of the SEBI ICDR Regulations read with the SEBI Rights Issue

Circular, the credit of Rights Entitlements and Allotment of Equity Shares shall be made in

dematerialized form only. Prior to the Issue Opening Date, our Company shall credit the Rights

Entitlements to (i) the demat accounts of the Eligible Equity Shareholders holding the Equity Shares in

dematerialised form; and (ii) a demat suspense escrow account opened by our Company, for the Eligible

Equity Shareholders which would comprise Rights Entitlements relating to (a) Equity Shares held in a

demat suspense account pursuant to Regulation 39 of the SEBI Listing Regulations; or (b) Equity Shares

held in the account of IEPF authority; or (c) the demat accounts of the Eligible Equity Shareholder which

are frozen or details of which are unavailable with our Company or with the Registrar on the Record

Date; or (d) Equity Shares held by Eligible Equity Shareholders holding Equity Shares in physical form

as on Record Date where details of demat accounts are not provided by Eligible Equity Shareholders to

our Company or Registrar; or (e) credit of the Rights Entitlements returned/reversed/failed; or (f) the

ownership of the Equity Shares under dispute, including any court proceedings, as applicable.

Eligible Equity Shareholders holding Equity Shares in physical form as on Record Date are requested to

provide relevant details (such as copies of self-attested PAN and client master sheet of demat account

etc., details/ records confirming the legal and beneficial ownership of their respective Equity Shares) to

the Company or the Registrar not later than two Working Days prior to the Issue Closing Date, i.e., by

Friday, August 7, 2020 to enable the credit of their Rights Entitlements by way of transfer from the demat

suspense escrow account to their demat account at least one day before the Issue Closing Date, to enable

such Eligible Equity Shareholders to make an application in this Issue, and this communication shall

serve as an intimation to such Eligible Equity Shareholders in this regard. Such Eligible Equity

Shareholders are also requested to ensure that their demat account is active, details of which have been

provided to the Company or the Registrar, to facilitate the aforementioned transfer.

4. Application by Eligible Equity Shareholders holding Equity Shares in physical form:

In accordance with the SEBI Rights Issue Circulars, (a) the Eligible Equity Shareholders, who hold

Equity Shares in physical form as on Record Date; or (b) the Eligible Equity Shareholders, who hold

Equity Shares in physical form as on Record Date and who have not furnished the details of their demat

account to the Registrar or our Company at least two Working Days prior to the Issue Closing Date,

desirous of subscribing to Equity Shares may also apply in this Issue during the Issue Period. Application

by such Eligible Equity Shareholders is subject to following conditions:

(i) the Eligible Equity Shareholders apply only through R-WAP;



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(ii) the Eligible Equity Shareholders are residents and individuals;

(iii) the Eligible Equity Shareholders are not making payment from non-resident account;

(iv) the Eligible Equity Shareholders shall not be able to renounce their Rights Entitlements; and

(v) the Eligible Equity Shareholders shall receive Equity Shares, in respect of their Application,

only in demat mode.

Accordingly, such resident Eligible Equity Shareholders are required to, within 6 (six) months from the

Allotment Date, send a communication to our Company or the Registrar containing the name(s), Indian

address, email address, contact details and the details of their demat account along with copy of self-

attested PAN and self-attested client master sheet of their demat account either by post, speed post,

courier, electronic mail or hand delivery, to enable process of credit of Equity Shares in such demat

account.

Such resident Eligible Equity Shareholders must check the procedure for Application by and credit of

Equity Shares in “- Procedure for Application by Eligible Equity Shareholders holding Equity Shares in

physical form” and “- Credit and Transfer of Equity Shares in case of Shareholders holding Equity

Shares in Physical Form and disposal of Equity Shares for non-receipt of demat account details in a

timely manner” on pages 352 and 366, respectively.

5. Other important links and helpline:

The Investors can visit following links for the below-mentioned purposes:

• Frequently asked questions and online/ electronic dedicated investor helpdesk for guidance on

the Application process and resolution of difficulties faced by the Investors:

https://rights.kfintech.com/mahindra

• Updation of Indian address/ email address/ mobile number in the records maintained by the

Registrar or our Company: https://rights.kfintech.com/mahindra

• Updation of demat account details by Eligible Equity Shareholders holding shares in physical

form: https://rights.kfintech.com/mahindra

• Submission of self-attested PAN, client master sheet and demat account details by non-resident

Eligible Equity Shareholders: [email protected]

Renouncees

All rights and obligations of the Eligible Equity Shareholders in relation to Applications and refunds pertaining

to this Issue shall apply to the Renouncee(s) as well.

Basis for this Issue

The Equity Shares are being offered for subscription for cash to the Eligible Equity Shareholders whose names

appear as beneficial owners as per the list to be furnished by the Depositories in respect of our Equity Shares held

in dematerialised form and on the register of members of our Company in respect of our Equity Shares held in

physical form at the close of business hours on the Record Date.

Rights Entitlements

As your name appears as a beneficial owner in respect of the issued and paid-up Equity Shares held in

dematerialised form or appears in the register of members of our Company as an Eligible Equity Shareholder in

respect of our Equity Shares held in physical form, as on the Record Date, you may be entitled to subscribe to the

number of Equity Shares as set out in the Rights Entitlement Letter.

Eligible Equity Shareholders can also obtain the details of their respective Rights Entitlements from the website

of the Registrar (i.e., https://rights.kfintech.com/mahindra) by entering their DP ID and Client ID or Folio Number






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(in case of Eligible Equity Shareholders holding Equity Shares in physical form) and PAN. The link for the same

shall also be available on the website of our Company (i.e., www.mahindrafinance.com).

Rights Entitlements shall be credited to the respective demat accounts of Eligible Equity Shareholders before the

Issue Opening Date only in dematerialised form. If Eligible Equity Shareholders holding Equity Shares in physical

form as on Record Date, have not provided the details of their demat accounts to our Company or to the Registrar,

they are required to provide their demat account details to our Company or the Registrar not later than two

Working Days prior to the Issue Closing Date, to enable the credit of the Rights Entitlements by way of transfer

from the demat suspense escrow account to their respective demat accounts, at least one day before the Issue

Closing Date. Such Eligible Equity Shareholders holding shares in physical form can update the details of their

respective demat accounts on the website of the Registrar (i.e., https://rights.kfintech.com/mahindra). Such

Eligible Equity Shareholders can make an Application only after the Rights Entitlements is credited to their

respective demat accounts, except in case of resident Eligible Equity Shareholders holding Equity Shares in

physical form as on Record Date and applying through R-WAP (an additional optional facility).

For details of Application through R-WAP by the Eligible Equity Shareholders holding Equity Shares in physical

form as on Record Date, see “- Procedure for Application by Eligible Equity Shareholders holding Equity Shares

in physical form” and “- Credit and Transfer of Equity Shares in case of Shareholders holding Equity Shares in

Physical Form and disposal of Equity Shares for non-receipt of demat account details in a timely manner” on

pages 352 and 366, respectively.

Our Company is undertaking this Issue on a rights basis to the Eligible Equity Shareholders and will send/

dispatch the Abridged Letter of Offer, the Rights Entitlement Letter and the Application Form only to e-

mail addresses of Eligible Equity Shareholders who have provided an Indian address to our Company and

are located in jurisdictions where the offer and sale of the Equity Shares may be permitted under laws of

such jurisdictions. This Letter of Offer will be sent/ dispatched (i) only to e-mail addresses of resident

Eligible Equity Shareholders who have provided their e-mail addresses; (ii) only to the Indian addresses of

the resident Eligible Equity Shareholders, on a reasonable effort basis. whose e-mail addresses are not

available with the Company or the Eligible Equity Shareholders have not provided the valid e-mail address

to the Company; (iii) only to the Indian addresses of the non-resident Eligible Equity Shareholders, on a

reasonable effort basis, who have provided an Indian address to our Company and located in jurisdictions

where the offer and sale of the Equity Shares may be permitted under laws of such jurisdictions, by the

Registrar on behalf of our Company or the Lead Managers, in each case who make a request in this regard.

This Letter of Offer, the Abridged Letter of Offer and the Application Form may also be accessed on the

websites of the Registrar, R-WAP, our Company and the Lead Managers through a link contained in the

aforementioned email sent to email addresses of Eligible Equity Shareholders (provided that the Eligible

Equity Shareholder is eligible to subscribe for the Equity Shares under applicable securities laws) and on

the Stock Exchange websites. The distribution of this Letter of Offer, Abridged Letter of Offer, the Rights

Entitlement Letter and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside

India is restricted by legal requirements prevailing in those jurisdictions. No action has been, or will be,

taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that

this Letter of Offer has been filed with SEBI and the Stock Exchanges. Accordingly, the Rights Entitlements

and Equity Shares may not be offered or sold, directly or indirectly, and this Letter of Offer, the Abridged

Letter of Offer, the Rights Entitlement Letter, the Application Form or any Issue related materials or

advertisements in connection with this Issue may not be distributed, in any jurisdiction, except in

accordance with legal requirements applicable in such jurisdiction. Receipt of this Letter of Offer, the

Abridged Letter of Offer, the Rights Entitlement Letter or the Application Form (including by way of

electronic means) will not constitute an offer in those jurisdictions in which it would be illegal to make such

an offer and, in those circumstances, this Letter of Offer, the Abridged Letter of Offer, the Rights

Entitlement Letter or the Application Form must be treated as sent for information only and should not be

acted upon for making an Application and should not be copied or re-distributed. Accordingly, persons

receiving a copy of this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter or the

Application Form should not, in connection with the issue of the Equity Shares or the Rights Entitlements,

distribute or send this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter or the

Application Form in or into any jurisdiction where to do so, would, or might, contravene local securities

laws or regulations. If this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter or

the Application Form is received by any person in any such jurisdiction, or by their agent or nominee, they

must not seek to make an Application or acquire the Rights Entitlements referred to in this Letter of Offer,

the Abridged Letter of Offer, the Rights Entitlement Letter or the Application Form. Any person who

acquires Rights Entitlements or makes and Application will be deemed to have declared, warranted and


343

agreed, by accepting the delivery of this Letter of Offer, the Abridged Letter of Offer, the Rights

Entitlement Letter and the Application Form, that it is entitled to subscribe for the Equity Shares under

the laws of any jurisdiction which apply to such person.

PRINCIPAL TERMS OF THIS ISSUE

Face Value

Each Equity Share will have the face value of ₹ 2.

Issue Price

Each Equity Share is being offered at a price of ₹ 50 per Equity Share (including a premium of ₹ 48 per Equity

Share) in this Issue. The Issue Price for Equity Shares has been arrived at by our Company in consultation with

the Lead Managers and has been decided prior to the determination of the Record Date.

Rights Entitlements Ratio

The Equity Shares are being offered on a rights basis to the Eligible Equity Shareholders in the ratio of one Equity

Share for every one Equity Share held by the Eligible Equity Shareholders as on the Record Date.

Renunciation of Rights Entitlements

This Issue includes a right exercisable by Eligible Equity Shareholders to renounce the Rights Entitlements

credited to their respective demat account either in full or in part.

The renunciation from non-resident Eligible Equity Shareholder(s) to resident Indian(s) and vice versa shall be

subject to provisions of FEMA Rules and other circular, directions, or guidelines issued by RBI or the Ministry

of Finance from time to time. However, the facility of renunciation shall not be available to or operate in favour

of an Eligible Equity Shareholders being an erstwhile OCB unless the same is in compliance with the FEMA

Rules and other circular, directions, or guidelines issued by RBI or the Ministry of Finance from time to time.

The renunciation of Rights Entitlements credited in your demat account can be made either by sale of such Rights

Entitlements, using the secondary market platform of the Stock Exchanges or through an off-market transfer. For

details, see “- Procedure for Renunciation of Rights Entitlements” on page 353.

In accordance with SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020, the Eligible Equity

Shareholders, who hold Equity Shares in physical form as on Record Date and who have not furnished the details

of their demat account to the Registrar or our Company at least two Working Days prior to the Issue Closing Date,

will not be able to renounce their Rights Entitlements.

Credit of Rights Entitlements in dematerialised account

In accordance with Regulation 77A of the SEBI ICDR Regulations read with the SEBI Rights Issue Circular, the

credit of Rights Entitlements and Allotment of Equity Shares shall be made in dematerialized form only. Prior to

the Issue Opening Date, our Company shall credit the Rights Entitlements to (i) the demat accounts of the Eligible

Equity Shareholders holding the Equity Shares in dematerialised form; and (ii) a demat suspense escrow account

opened by our Company, for the Eligible Equity Shareholders which would comprise Rights Entitlements relating

to (a) Equity Shares held in a demat suspense account pursuant to Regulation 39 of the SEBI Listing Regulations;

or (b) Equity Shares held in the account of IEPF authority; or (c) the demat accounts of the Eligible Equity

Shareholder which are frozen or details of which are unavailable with our Company or with the Registrar on the

Record Date; or (d) Equity Shares held by Eligible Equity Shareholders holding Equity Shares in physical form

as on Record Date where details of demat accounts are not provided by Eligible Equity Shareholders to our

Company or Registrar; or (e) credit of the Rights Entitlements returned/reversed/failed; or (f) the ownership of

the Equity Shares under dispute, including any court proceedings, as applicable.

In this regard, our Company has made necessary arrangements with NSDL and CDSL for the crediting of the

Rights Entitlements to the demat accounts of the Eligible Equity Shareholders in a dematerialized form. A separate

ISIN for the Rights Entitlements has also been generated which is INE774D20016. The said ISIN shall remain

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frozen (for debit) until the Issue Opening Date. The said ISIN shall be suspended for transfer by the Depositories

post the Issue Closing Date.

Eligible Equity Shareholders are requested to provide relevant details (such as copies of self-attested PAN and

client master sheet of demat account etc., details/ records confirming the legal and beneficial ownership of their

respective Equity Shares) to the Company or the Registrar not later than two Working Days prior to the Issue

Closing Date, i.e., by Friday, August 7, 2020, to enable the credit of their Rights Entitlements by way of transfer

from the demat suspense escrow account to their demat account at least one day before the Issue Closing Date, to

enable such Eligible Equity Shareholders to make an application in this Issue, and this communication shall serve

as an intimation to such Eligible Equity Shareholders in this regard. Such Eligible Equity Shareholders are also

requested to ensure that their demat account, details of which have been provided to the Company or the Registrar

account is active to facilitate the aforementioned transfer.

Additionally, our Company will submit the details of the total Rights Entitlements credited to the demat accounts

of the Eligible Equity Shareholders and the demat suspense escrow account to the Stock Exchanges after

completing the corporate action. The details of the Rights Entitlements with respect to each Eligible Equity

Shareholders can be accessed by such respective Eligible Equity Shareholders on the website of the Registrar after

keying in their respective details along with other security control measures implemented thereat.

Trading of the Rights Entitlements

In accordance with the SEBI Rights Issue Circulars, the Rights Entitlements credited shall be admitted for trading

on the Stock Exchanges under ISIN INE774D20016. Prior to the Issue Opening Date, our Company will obtain

the approval from the Stock Exchanges for trading of Rights Entitlements. Investors shall be able to trade their

Rights Entitlements either through On Market Renunciation or through Off Market Renunciation. The trades

through On Market Renunciation and Off Market Renunciation will be settled by transferring the Rights

Entitlements through the depository mechanism.

The On Market Renunciation shall take place electronically on the secondary market platform of the Stock

Exchanges on T+2 rolling settlement basis, where T refers to the date of trading. The transactions will be settled

on trade-for-trade basis. The Rights Entitlements shall be tradable in dematerialized form only. The market lot for

trading of Rights Entitlements is one Rights Entitlements.

The On Market Renunciation shall take place only during the Renunciation Period for On Market Renunciation,

i.e., from Tuesday, July 28, 2020 to Friday, August 7, 2020 (both days inclusive). No assurance can be given

regarding the active or sustained On Market Renunciation or the price at which the Rights Entitlements will trade.

Eligible Equity Shareholders are requested to ensure that renunciation through off-market transfer is completed

in such a manner that the Rights Entitlements are credited to the demat account of the Renouncees on or prior to

the Issue Closing Date. For details, see “- Procedure for Renunciation of Rights Entitlements – On Market

Renunciation” and “- Procedure for Renunciation of Rights Entitlements – Off Market Renunciation” on page

354. Once the Rights Entitlements are credited to the demat account of the Renouncees, application in the Issue

could be made until the Issue Closing Date. For details, see “ – Procedure for Application” on page 347.

Please note that the Rights Entitlements which are neither renounced nor subscribed by the Investors on

or before the Issue Closing Date shall lapse and shall be extinguished after the Issue Closing Date.

Terms of Payment

Full amount of ₹ 50 per Equity Share (including premium of ₹ 48 per Equity Share) shall be payable on

Application.

Fractional Entitlements

The Equity Shares are being offered on a rights basis to existing Eligible Equity Shareholders in the ratio of one

Equity Share for every one Equity Share held as on the Record Date. Accordingly, there shall be no fractional

entitlement in this Issue.

Credit Rating

As this Issue is a rights issue of Equity Shares, there is no requirement of credit rating for this Issue.

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Ranking

The Equity Shares to be issued and Allotted pursuant to this Issue shall be subject to the provisions of this Letter

of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter, the Application Form, and the Memorandum

of Association and the Articles of Association, the provisions of the Companies Act, 2013, FEMA, the SEBI

ICDR Regulations, the SEBI Listing Regulations, and the guidelines, notifications and regulations issued by SEBI,

the Government of India and other statutory and regulatory authorities from time to time, the terms of the Listing

Agreements entered into by our Company with the Stock Exchanges and the terms and conditions as stipulated in

the Allotment advice. The Equity Shares to be issued and Allotted under this Issue shall rank pari passu with the

existing Equity Shares, in all respects including dividends.

Listing and trading of the Equity Shares to be issued pursuant to this Issue

Subject to receipt of the listing and trading approvals, the Equity Shares proposed to be issued on a rights basis

shall be listed and admitted for trading on the Stock Exchanges. Unless otherwise permitted by the SEBI ICDR

Regulations, the Equity Shares Allotted pursuant to this Issue will be listed as soon as practicable and all steps for

completion of necessary formalities for listing and commencement of trading in the Equity Shares will be taken

within such period prescribed under the SEBI ICDR Regulations. Our Company has received in-principle approval

from the BSE through letter bearing reference number DCS/RIGHTS/SV/IP-RT/700/2020-21 dated July 15, 2020,

and from NSE through letter bearing reference number NSE/LIST/24207 dated July 15, 2020. Our Company will

apply to the Stock Exchanges for final approvals for the listing and trading of the Equity Shares subsequent to

their Allotment. No assurance can be given regarding the active or sustained trading in the Equity Shares or the

price at which the Equity Shares offered under this Issue will trade after the listing thereof.

The existing Equity Shares are listed and traded on BSE (Scrip Code: 532720) and NSE (Scrip Code: M&MFIN)

under the ISIN INE774D01024. The Equity Shares shall be credited to a temporary ISIN which will be frozen

until the receipt of the final listing/ trading approvals from the Stock Exchanges.

The listing and trading of the Equity Shares issued pursuant to this Issue shall be based on the current regulatory

framework then applicable. Accordingly, any change in the regulatory regime would affect the listing and trading

schedule.

In case our Company fails to obtain listing or trading permission from the Stock Exchanges, we shall refund

through verifiable means/unblock the respective ASBA Accounts, the entire monies received/blocked within

seven days of receipt of intimation from the Stock Exchanges, rejecting the application for listing of the Equity

Shares, and if any such money is not refunded/ unblocked within eight days after our Company becomes liable to

repay it, our Company and every director of our Company who is an officer-in-default shall, on and from the

expiry of the eighth day, be jointly and severally liable to repay that money with interest at rates prescribed under

applicable law.

Subscription to this Issue by our Promoter and our Promoter Group

For details of the intent and extent of subscription by our Promoter and the Promoter Group, see “Capital Structure

– Subscription to this Issue by our Promoter and Promoter Group” on page 82.

Rights of Holders of Equity Shares of our Company

Subject to applicable laws, the holders of Equity Shares shall have the following rights on the Equity Shares:

(a) The right to receive dividend, if declared;

(b) The right to vote in person, or by proxy, except in case of Equity Shares credited to the demat suspense

account for resident Eligible Equity Shareholders holding Equity Shares in physical form;

(c) The right to receive surplus on liquidation;

(d) The right to free transferability of Equity Shares;

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(e) The right to attend general meetings of our Company and exercise voting powers in accordance with law,

unless prohibited / restricted by law and as disclosed under “- Credit and Transfer of Equity Shares in case

of Shareholders holding Equity Shares in Physical Form and disposal of Equity Shares for non-receipt of

demat account details in a timely manner” on page 366; and

(f) Such other rights as may be available to a shareholder of a listed public company under the Companies

Act, 2013, the Memorandum of Association and the Articles of Association.

GENERAL TERMS OF THE ISSUE

Market Lot

The Equity Shares of our Company shall be tradable only in dematerialized form. The market lot for Equity Shares

in dematerialised mode is one Equity Share.

Joint Holders

Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the

same as the joint holders with the benefit of survivorship subject to the provisions contained in our Articles of

Association. In case of Equity Shares held by joint holders, the Application submitted in physical mode to the

Designated Branches of the SCSBs would be required to be signed by all the joint holders (in the same order as

appearing in the records of the Depository) to be considered as valid for allotment of Equity Shares offered in this

Issue.

Nomination

Nomination facility is available in respect of the Equity Shares in accordance with the provisions of the Section

72 of the Companies Act, 2013 read with Rule 19 of the Companies (Share Capital and Debenture) Rules, 2014.

Since the Allotment is in dematerialised form, there is no need to make a separate nomination for the Equity

Shares to be Allotted in this Issue. Nominations registered with the respective DPs of the Investors would prevail.

Any Investor holding Equity Shares in dematerialised form and desirous of changing the existing nomination is

requested to inform its Depository Participant.

Arrangements for Disposal of Odd Lots

The Equity Shares shall be traded in dematerialised form only and, therefore, the marketable lot shall be one

Equity Share and hence, no arrangements for disposal of odd lots are required.

Notices

In accordance with the SEBI ICDR Regulations, SEBI Rights Issue Circulars and MCA General Circular No.

21/2020, our Company will send/ dispatch the Abridged Letter of Offer, the Application Form, the Rights

Entitlement Letter and other Issue material (i) only to e-mail addresses of resident Eligible Equity Shareholders

who have provided their e-mail addresses; (ii) only to the Indian addresses of the resident Eligible Equity

Shareholders, on a reasonable effort basis. whose e-mail addresses are not available with the Company or the

Eligible Equity Shareholders have not provided the valid e-mail address to the Company; (iii) only to the Indian

addresses of the non-resident Eligible Equity Shareholders, on a reasonable effort basis, who have provided an

Indian address to our Company and located in jurisdictions where the offer and sale of the Equity Shares may be

permitted under laws of such jurisdictions. Further, this Letter of Offer will be sent/ dispatched (i) only to e-mail

addresses of resident Eligible Equity Shareholders who have provided their e-mail addresses; (ii) only to the Indian

addresses of the resident Eligible Equity Shareholders, on a reasonable effort basis. whose e-mail addresses are

not available with the Company or the Eligible Equity Shareholders have not provided the valid e-mail address

to the Company; (iii) only to the Indian addresses of the non-resident Eligible Equity Shareholders, on a reasonable

effort basis, who have provided an Indian address to our Company and located in jurisdictions where the offer

and sale of the Equity Shares may be permitted under laws of such jurisdictions, by the Registrar on behalf of our

Company or the Lead Managers, in each case who make a request in this regard.

All notices to the Eligible Equity Shareholders required to be given by our Company shall be published in one

English language national daily newspaper with wide circulation, one Hindi language national daily newspaper

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with wide circulation and one Marathi language daily newspaper with wide circulation (Marathi being the regional

language of Mumbai, where our Registered Office is situated).

In accordance with SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020, our Company will

make use of advertisements in television channels, radio, internet etc., including in the form of crawlers/ tickers,

to disseminate information relating to the Application process in India.

This Letter of Offer, the Abridged Letter of Offer and the Application Form shall also be submitted with the Stock

Exchanges for making the same available on their websites.

Offer to Non-Resident Eligible Equity Shareholders/Investors

As per Rule 7 of the FEMA Rules, RBI has given general permission to Indian companies to issue Equity Shares

to non-resident shareholders including additional Equity Shares. Further, as per the Master Direction on Foreign

Investment in India dated January 4, 2018 issued by RBI, non-residents may, amongst other things, (i) subscribe

for additional shares over and above their Rights Entitlements; (ii) renounce the shares offered to them either in

full or part thereof in favour of a person named by them; or (iii) apply for the shares renounced in their favour.

Applications received from NRIs and non-residents for allotment of Equity Shares shall be, amongst other things,

subject to the conditions imposed from time to time by RBI under FEMA in the matter of Application, refund of

Application Money, Allotment of Equity Shares and issue of Rights Entitlement Letters/ letters of

Allotment/Allotment advice. If a non-resident or NRI Investor has specific approval from RBI, in connection with

his shareholding in our Company, such person should enclose a copy of such approval with the Application details

and send it to the Registrar at [email protected].

The Abridged Letter of Offer, the Rights Entitlement Letter and Application Form shall be sent only to the Indian

addresses of the non-resident Eligible Equity Shareholders, on a reasonable efforts basis, who have provided an

Indian address to our Company and located in jurisdictions where the offer and sale of the Equity Shares may be

permitted under laws of such jurisdictions. Investors can access this Letter of Offer, the Abridged Letter of Offer

and the Application Form (provided that the Eligible Equity Shareholder is eligible to subscribe for the Equity

Shares under applicable securities laws) from the websites of the Registrar, our Company, the Lead Managers and

the Stock Exchanges. Our Board may at its absolute discretion, agree to such terms and conditions as may be

stipulated by RBI while approving the Allotment. The Equity Shares purchased by non-residents shall be subject

to the same conditions including restrictions in regard to the repatriation as are applicable to the original Equity

Shares against which Equity Shares are issued on rights basis.

In case of change of status of holders, i.e., from resident to non-resident, a new demat account must be opened.

Any Application from a demat account which does not reflect the accurate status of the Applicant is liable to be

rejected at the sole discretion of our Company and the Lead Managers.

Please note that only resident individual Investors can submit an Application using the R-WAP.

Please also note that pursuant to Circular No. 14 dated September 16, 2003 issued by RBI, Overseas Corporate

Bodies (“OCBs”) have been derecognized as an eligible class of investors and RBI has subsequently issued the

Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs))

Regulations, 2003. Any Investor being an OCB is required not to be under the adverse notice of RBI and to obtain

prior approval from RBI for applying in this Issue.

The non-resident Eligible Equity Shareholders can update their Indian address in the records maintained by the

Registrar and our Company by submitting their respective copies of self-attested proof of address, passport, etc.

at https://rights.kfintech.com/mahindra or [email protected].

PROCEDURE FOR APPLICATION

How to Apply

In accordance with Regulation 76 of the SEBI ICDR Regulations, SEBI Rights Issue Circulars and ASBA

Circulars, all Investors desiring to make an Application in this Issue are mandatorily required to use either

the ASBA process or the optional mechanism instituted only for resident individual Investors in this Issue,

i.e., R-WAP. Investors should carefully read the provisions applicable to such Applications before making

their Application through ASBA or using the R-WAP.




348

For details of procedure for application by the resident Eligible Equity Shareholders holding Equity Shares in

physical form as on the Record Date, see “- Procedure for Application by Eligible Equity Shareholders holding

Equity Shares in physical form” on page 352.

The Lead Managers, our Company, its directors, its employees, affiliates, associates and their respective

directors and officers and the Registrar shall not take any responsibility for acts, mistakes, errors,

omissions and commissions etc. in relation to Applications accepted by SCSBs, Applications uploaded by

SCSBs, Applications accepted but not uploaded by SCSBs or Applications accepted and uploaded without

blocking funds in the ASBA Accounts.

Application Form

The Application Form for the Equity Shares offered as part of this Issue would be sent (i) only to e-mail addresses

of resident Eligible Equity Shareholders who have provided their e-mail addresses; (ii) only to the Indian addresses

of the resident Eligible Equity Shareholders, on a reasonable effort basis. whose e-mail addresses are not

available with the Company or the Eligible Equity Shareholders have not provided the valid e-mail address to the

Company; (iii) only to the Indian addresses of the non-resident Eligible Equity Shareholders, on a reasonable

effort basis, who have provided an Indian address to our Company and located in jurisdictions where the offer

and sale of the Equity Shares may be permitted under laws of such jurisdictions. The Application Form along with

the Abridged Letter of Offer and the Rights Entitlement Letter shall be sent through email at least three days

before the Issue Opening Date.

Please note that neither our Company nor the Registrar nor the Lead Managers shall be responsible for

delay in the receipt of this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter or

the Application Form attributable to non-availability of the email addressess of Eligible Equity

Shareholders or electronic transmission delays or failures, or if the Application Forms or the Rights

Entitlement Letters are delayed or misplaced in the transit.

To update the respective email addresses/ mobile numbers in the records maintained by the Registrar or our

Company, Eligible Equity Shareholders should visit https://rights.kfintech.com/mahindra. Investors can access

this Letter of Offer, the Abridged Letter of Offer and the Application Form (provided that the Eligible Equity

Shareholder is eligible to subscribe for the Equity Shares under applicable securities laws) from the websites of:

(i) our Company at www.mahindrafinance.com;

(ii) the Registrar at https://rights.kfintech.com/mahindra;

(iii) the Lead Managers, i.e., (a) Kotak Mahindra Capital Company Limited at

www.investmentbank.kotak.com; (b) Axis Capital Limited at www.axiscapital.co.in, (c) BNP Paribas at

www.bnpparibas.co.in, (d) Citigroup Global Markets India Private Limited at

www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm, (e) HDFC Bank Limited at

www.hdfcbank.com, (f) HSBC Securities and Capital Markets (India) Private Limited at

https://www.business.hsbc.co.in/en-gb/in/generic/ipo-open-offer-and-buyback, (g) ICICI Securities

Limited at www.icicisecurities.com, (h) Nomura Financial Advisory and Securities (India) Private

Limited at www.nomuraholdings.com/company/ group/asia/india/index.html; and (i) SBI Capital

Markets Limited at www.sbicaps.com.

(iv) the Stock Exchanges at www.bseindia.com and www.nseindia.com; and

(v) the R-WAP at https://rights.kfintech.com/mahindra.

The Eligible Equity Shareholders can obtain the details of their respective Rights Entitlements from the website

of the Registrar (i.e., https://rights.kfintech.com/mahindra) by entering their DP ID and Client ID or Folio Number

(in case of resident Eligible Equity Shareholders holding Equity Shares in physical form) and PAN. The link for

the same shall also be available on the website of our Company (i.e., www.mahindrafinance.com).

The Application Form can be used by the Investors, Eligible Equity Shareholders as well as the Renouncees, to

make Applications in this Issue basis the Rights Entitlements credited in their respective demat accounts or demat

suspense escrow account, as applicable. Please note that one single Application Form shall be used by the

Investors to make Applications for all Rights Entitlements available in a particular demat account or entire



http://www.investmentbank.kotak.com/

https://www.business.hsbc.co.in/en-gb/in/generic/ipo-open-offer-and-buyback




349

respective portion of the Rights Entitlements in the demat suspense escrow account in case of resident Eligible

Equity Shareholders holding shares in physical form as on Record Date and applying in this Issue, as applicable.

In case of Investors who have provided details of demat account in accordance with the SEBI ICDR Regulations,

such Investors will have to apply for the Equity Shares from the same demat account in which they are holding

the Rights Entitlements and in case of multiple demat accounts, the Investors are required to submit a separate

Application Form for each demat account.

Investors may accept this Issue and apply for the Equity Shares (i) submitting the Application Form to the

Designated Branches of the SCSB or online/electronic Application through the website of the SCSBs (if made

available by such SCSB) for authorising such SCSB to block Application Money payable on the Application in

their respective ASBA Accounts, or (ii) filling the online Application Form available on R-WAP and make online

payment using the internet banking or UPI facility from their own bank account thereat. Please note that

Applications made with payment using third party bank accounts are liable to be rejected.

Investors are also advised to ensure that the Application Form is correctly filled up stating therein, (i)the ASBA

Account (in case of Application through ASBA process) in which an amount equivalent to the amount payable on

Application as stated in the Application Form will be blocked by the SCSB; or (ii) the requisite internet banking

or UPI details (in case of Application through R-WAP, which is available only for resident individual Investors).

Please note that Applications without depository account details shall be treated as incomplete and shall be

rejected, except in case of Eligible Equity Shareholders who hold Equity Shares in physical form and are

applying in this Issue in accordance with the SEBI Rights Issue Circulars through R-WAP.

Applicants should note that they should very carefully fill-in their depository account details and PAN

number in the Application Form or while submitting application through online/electronic Application

through the website of the SCSBs (if made available by such SCSB) and R-WAP. Incorrect depository

account details or PAN number could lead to rejection of the Application. For details see “- Grounds for

Technical Rejection” on page 360. Our Company, the Lead Managers, the Registrar and the SCSBs shall

not be liable for any incorrect demat details provided by the Applicants.

Additionally, in terms of Regulation 78 of the SEBI ICDR Regulations, Investors may choose to accept the offer

to participate in this Issue by making plain paper Applications. Please note that Eligible Equity Shareholders

making an application in this Issue by way of plain paper applications shall not be permitted to renounce any

portion of their Rights Entitlements. For details, see “- Application on Plain Paper under ASBA process” on page

350.

Options available to the Eligible Equity Shareholders

The Rights Entitlement Letter will clearly indicate the number of Equity Shares that the Eligible Equity

Shareholder is entitled to.

If the Eligible Equity Shareholder applies in this Issue, then such Eligible Equity Shareholder can:

(i) apply for its Equity Shares to the full extent of its Rights Entitlements; or

(ii) apply for its Equity Shares to the extent of part of its Rights Entitlements (without renouncing the other

part); or

(iii) apply for Equity Shares to the extent of part of its Rights Entitlements and renounce the other part of its

Rights Entitlements; or

(iv) apply for its Equity Shares to the full extent of its Rights Entitlements and apply for additional Equity

Shares in the Issue; or

(v) renounce its Rights Entitlements in full.

In accordance with the SEBI Rights Issue Circulars, (a) the Eligible Equity Shareholders, who hold Equity Shares

in physical form as on Record Date; or (b) the Eligible Equity Shareholders, who hold Equity Shares in physical

form as on Record Date and who have not furnished the details of their demat account to the Registrar or our

Company at least two Working Days prior to the Issue Closing Date, desirous of subscribing to Equity Shares

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may also apply in this Issue during the Issue Period. Such resident Eligible Equity Shareholders must check the

procedure for Application by and credit of Equity Shares in “- Procedure for Application by Eligible Equity

Shareholders holding Equity Shares in physical form” and “- Credit and Transfer of Equity Shares in case of

Shareholders holding Equity Shares in Physical Form and disposal of Equity Shares for non-receipt of demat

account details in a timely manner” on pages 352 and 366, respectively.

Procedure for Application through the ASBA process

An Investor, wishing to participate in this Issue through the ASBA facility, is required to have an ASBA enabled

bank account with an SCSB, prior to making the Application. Investors desiring to make an Application in this

Issue through ASBA process, may submit the Application Form to the Designated Branches of the SCSB or

online/electronic Application through the website of the SCSBs (if made available by such SCSB) for authorising

such SCSB to block Application Money payable on the Application in their respective ASBA Accounts.

Investors should ensure that they have correctly submitted the Application Form, or have otherwise provided an

authorisation to the SCSB, via the electronic mode, for blocking funds in the ASBA Account equivalent to the

Application Money mentioned in the Application Form, as the case may be, at the time of submission of the

Application.

Self-Certified Syndicate Banks

For the list of banks which have been notified by SEBI to act as SCSBs for the ASBA process, please refer to

https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34. For details on

Designated Branches of SCSBs collecting the Application Form, please refer the above-mentioned link.

Please note that subject to SCSBs complying with the requirements of SEBI Circular No.

CIR/CFD/DIL/13/2012 dated September 25, 2012 within the periods stipulated therein, ASBA Applications

may be submitted at the Designated Branches of the SCSBs, in case of Applications made through ASBA

facility.

The our Company, its directors, its employees, affiliates, associates and their respective directors and officers,

Lead Managers and the Registrar shall not take any responsibility for acts, mistakes, errors, omissions and

commissions etc., in relation to Applications accepted by SCSBs, Applications uploaded by SCSBs, Applications

accepted but not uploaded by SCSBs or Applications accepted and uploaded without blocking funds in the ASBA

Accounts.

Application on Plain Paper under ASBA process

An Eligible Equity Shareholder who is eligible to apply under the ASBA process may make an Application to

subscribe to this Issue on plain paper. An Eligible Equity Shareholder shall submit the plain paper Application to

the Designated Branches of the SCSB for authorising such SCSB to block Application Money in the said bank

account maintained with the same SCSB. Applications on plain paper will not be accepted from any address

outside India.

Please note that the Eligible Equity Shareholders who are making the Application on plain paper shall not be

entitled to renounce their Rights Entitlements and should not utilize the Application Form for any purpose

including renunciation even if it is received subsequently.

Procedure for Application through the R-WAP

Resident individual Investors, making an Application through R-WAP, shall make online payment using

internet banking or UPI facility. Prior to making an Application, such Investors should enable the internet

banking or UPI facility of their respective bank accounts and such Investors should ensure that the

respective bank accounts have sufficient funds. Our Company, the Registrar and the Lead Managers shall

not be responsible if the Application is not successfully submitted or rejected during the Basis of Allotment,

on account of failure to be in compliance with the same. R-WAP facility will be operational from the Issue

Opening Date. For risks associated with the R-WAP process, see “Risk Factors” on page 20.

Set out below is the procedure followed using the R-WAP:

https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34

351

(a) Prior to making an Application, the Investors should enable the internet banking or UPI facility of their

respective bank accounts and the Investors should ensure that the respective bank accounts have sufficient

funds. If the funds available in the bank account are less than total amount payable on submission of online

Application Form, such Application shall be rejected. Please note that R-WAP is a non-cash mode

mechanism in accordance with the SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020.

(b) Resident individual Investors should visit R-WAP (accessible at https://rights.kfintech.com/mahindra) and

fill the online Application Form available on R-WAP in electronic mode. Please ensure to provide correct

DP ID, Client ID, Folio number (only for resident Eligible Equity Shareholders, who hold Equity Shares

in physical form as on Record Date), PAN details and all other details sought for while submitting the

online Application Form.

(c) Non-resident Investors are not eligible to apply in this Issue through R-WAP.

(d) Only resident individual Investors are eligible to apply in this issue through R-WAP.

(e) The Investors should ensure that Application process is verified through the email / mobile number. Post

due verification, the Investors can obtain details of their respective Rights Entitlements and apply in this

Issue by filling-up the online Application Form which, among others, will require details of total number

of Equity Shares to be applied for.

(f) The Investors who are Renouncees should select the category of ‘Renouncee’ at the application page of R-

WAP and provide DP ID, Client ID, PAN and other required demographic details for validation. The

Renouncees shall also be required to provide the required Application details, such as total number of

Equity Shares to be applied for. A Shareholder who has purchased Rights Entitlement from the Stock

Exchanges or through off-market transaction, should select “Eligible Equity Shareholder” category.

(g) Investors applying in the Issue through UPI facility should accept the debit/ payment request in the relevant

mobile application for which the UPI ID details were provided.

(h) The Investors shall make online payment using internet banking or UPI facility from their own bank

account only. Such Application Money will be adjusted for either Allotment or refund. Applications made

using payment from third party bank accounts will be rejected.

(i) Verification in respect of Application through Investors’ own bank account, shall be done through the latest

beneficial position data of our Company containing Investor’s bank account details, beneficiary account

details provided to the depository, penny drop, cancelled cheque for joint holder verification and such other

industry accepted and tested methods for online payment.

(j) The Application Money collected through Applications made on the R-WAP will be credited to the Escrow

Account, opened by our Company with the Escrow Collection Bank.

For guidance on the Application process through R-WAP and resolution of difficulties faced by the Investors, the

Investors are advised to carefully read the frequently asked questions, visit the online/ electronic dedicated

investor helpdesk at https://rights.kfintech.com/mahindra or call helpline numbers 18004258998/18003454001.

Acceptance of this Issue

Investors may accept this Issue and apply for the Equity Shares (i) submitting the Application Form to the

Designated Branches of the SCSB or online/electronic Application through the website of the SCSBs (if made

available by such SCSB) for authorising such SCSB to block Application Money payable on the Application in

their respective ASBA Accounts, or (ii) filling the online Application Form available on R-WAP and make online

payment using their internet banking or UPI facility from their own bank account thereat.

Please note that on the Issue Closing Date, (i) Applications through ASBA process will be uploaded until 5.00

p.m. (Indian Standard Time) or such extended time as permitted by the Stock Exchanges, and (ii) the R-WAP

facility will be available until 5.00 p.m. (Indian Standard Time) or such extended time as permitted by the Stock

Exchanges.



352

Applications submitted to anyone other than the Designated Branches of the SCSB or using R-WAP are

liable to be rejected.

Investors can also make Application on plain paper under ASBA process mentioning all necessary details as

mentioned under the section “- Application on Plain Paper under ASBA process” on page 350.

Additional Equity Shares

Investors are eligible to apply for additional Equity Shares in the Issue, over and above their Rights Entitlements,

provided that they are eligible to apply for Equity Shares under applicable law and they have applied for all the

Equity Shares forming part of their Rights Entitlements without renouncing them in whole or in part. Where the

number of additional Equity Shares applied for exceeds the number available for Allotment, the Allotment would

be made as per the Basis of Allotment finalised in consultation with the Designated Stock Exchange. Applications

for additional Equity Shares in the Issue, shall be considered and Allotment shall be made in accordance with the

SEBI ICDR Regulations and in the manner prescribed under the section “- Basis of Allotment” on page 365.

Eligible Equity Shareholders who renounce their Rights Entitlements cannot apply for additional Equity Shares

in the Issue. Non-resident Renouncees who are not Eligible Equity Shareholders cannot apply for additional

Equity Shares in the Issue.

Resident Eligible Equity Shareholders who hold Equity Shares in physical form as on the Record Date cannot

renounce until the details of their demat account are provided to our Company or the Registrar and the

dematerialized Rights Entitlements are transferred from suspense escrow demat account to the respective demat

accounts of such Eligible Equity Shareholders within prescribed timelines. However, Such Eligible Equity

Shareholders, where the dematerialized Rights Entitlements are transferred from the suspense escrow demat

account to the respective demat accounts within prescribed timelines, can apply for additional Equity Shares in

the Issue, while submitting the Application through ASBA process or using the R-WAP.

Application by Eligible Equity Shareholders holding Equity Shares in physical form

Please note that in accordance with Regulation 77A of the SEBI ICDR Regulations read with the SEBI Rights

Issue Circulars, the credit of Rights Entitlements and Allotment of Equity Shares shall be made in dematerialised

form only. Accordingly, Eligible Equity Shareholders holding Equity Shares in physical form as on Record Date

and desirous of subscribing to Equity Shares in this Issue are advised to furnish the details of their demat account

to the Registrar or our Company at least two Working Days prior to the Issue Closing Date, to enable the credit

of their Rights Entitlements in their respective demat accounts at least one day before the Issue Closing Date.

Prior to the Issue Opening Date, the Rights Entitlements of those resident Eligible Equity Shareholders, among

others, who hold Equity Shares in physical form, and whose demat account details are not available with our

Company or the Registrar, shall be credited in a demat suspense escrow account opened by our Company.

In accordance with the SEBI Rights Issue Circulars, (a) the Eligible Equity Shareholders, who hold Equity Shares

in physical form as on Record Date; or (b) the Eligible Equity Shareholders, who hold Equity Shares in physical

form as on Record Date and who have not furnished the details of their demat account to the Registrar or our

Company at least two Working Days prior to the Issue Closing Date, desirous of subscribing to Equity Shares

may also apply in this Issue during the Issue Period. Such Eligible Equity Shareholders must check the procedure

for Application by and credit of Equity Shares in “- Procedure for Application by Eligible Equity Shareholders

holding Equity Shares in physical form” and “- Credit and Transfer of Equity Shares in case of Shareholders

holding Equity Shares in Physical Form and disposal of Equity Shares for non-receipt of demat account details

in a timely manner” on pages 352 and 366, respectively.

To update respective email addresses/ mobile numbers in the records maintained by the Registrar or our Company,

Eligible Equity Shareholders should visit https://rights.kfintech.com/mahindra.

Procedure for Application by Eligible Equity Shareholders holding Equity Shares in physical form

Eligible Equity Shareholders, who hold Equity Shares in physical form as on Record Date and who have opened

their demat accounts after the Record Date, shall adhere to following procedure for participating in this Issue:


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(a) The Eligible Equity Shareholders shall send a letter to the Registrar containing the name(s), address,

email address, contact details and the details of their demat account along with copy of self-attested PAN

and self-attested client master sheet of their demat account either by email, post, speed post, courier, or

hand delivery so as to reach to the Registrar no later than two Working Days prior to the Issue Closing

Date. The Eligible Equity Shareholders are encouraged to send the details by email due to lockdown and

restrictions imposed due to current pandemic COVID-19;

(b) The Registrar shall, after verifying the details of such demat account, transfer the Rights Entitlements of

such Eligible Equity Shareholders to their demat accounts at least one day before the Issue Closing Date;

(c) The Eligible Equity Shareholders can access the Application Form from:

• R-WAP, the website of the Registrar (https://rights.kfintech.com/mahindra);

• our Company (www.mahindrafinance.com);

• the Lead Managers (www.investmentbank.kotak.com,www.axiscapital.co.in,

www.bnpparibas.co.in,

www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm,www.hdfcbank.com,

www.business.hsbc.co.in/en-gb/in/generic/ipo-open-offer-and-buyback, www.icicisecurities.com,

www.nomuraholdings.com/company/ group/asia/india/index.html and www.sbicaps.com);

• the Stock Exchanges (at www.bseindia.com and www.nseindia.com).

Eligible Equity Shareholders can obtain the details of their respective Rights Entitlements from the

website of the Registrar (i.e., https://rights.kfintech.com/mahindra) by entering their DP ID and Client

ID or Folio Number (in case of Eligible Equity Shareholders holding Equity Shares in physical form)

and PAN. The link for the same shall also be available on the website of our Company (i.e.,

www.mahindrafinance.com);

(d) The Eligible Equity Shareholders shall, on or before the Issue Closing Date, (i) submit the Application

Form to the Designated Branches of the SCSB or online/electronic Application through the website of

the SCSBs (if made available by such SCSB) for authorising such SCSB to block Application Money

payable on the Application in their respective ASBA Accounts, or (ii) fill the online Application Form

available on R-WAP and make online payment using their internet banking or UPI facility from their

own bank account thereat.

Further, (a) Resident Eligible Equity Shareholders, who hold Equity Shares in physical form as on Record Date;

or (b) resident Eligible Equity Shareholders, who hold Equity Shares in physical form as on Record Date, and

who have not furnished the details of their demat account to the Registrar or our Company at least two Working

Days prior to the Issue Closing Date, may also apply in this Issue during the Issue Period by filling the online

Application Form available on R-WAP and make online payment using their internet banking or UPI facility from

their own bank account thereat, on or before the Issue Closing Date. Such resident Eligible Equity Shareholders

may be required to submit address, email address, contact details, copy of PAN, for verification of their

Application. Further, such resident Eligible Equity Shareholder can:

(a) apply for its Equity Shares to the full extent of its Rights Entitlements;

(b) apply for its Equity Shares to the extent of part of its Rights Entitlements (without renouncing the other

part); and

(c) apply for its Equity Shares to the full extent of its Rights Entitlements and apply for additional Equity

Shares in the Issue.

Procedure for Renunciation of Rights Entitlements

The Investors may renounce the Rights Entitlements, credited to their respective demat accounts, either in full or

in part (a) by using the secondary market platform of the Stock Exchanges; or (b) through an off-market transfer,

during the Renunciation Period. The Investors should have the demat Rights Entitlements credited/lying in his/her

own demat account prior to the renunciation.


http://www.axiscapital.co.in/

http://www.bnpparibas.co.in/

http://www.online.citibank.co.in/rhtm/citigroupglobalscreen1.htm

http://www.hdfcbank.com/

http://www.icicisecurities.com/

http://secure-web.cisco.com/1d7FSZwbPbFEkAMSL8Ny5UFkwoisETWLpo3f1AkJiU2c3qAuCbfye-OyA_e2VgiE0fPmnOZ9deUVDtAEPNmwzHxs8I_zW5isuOcdzqc-OEA7q65_N3gI5Gktbpu_xXcOKVatJChv5c8llBC-P3g_P7zg6Eoy5UbLKP_0Y8pa-qiLC4pNFcbpg8OZycOvpiP3ulINJofriYm-x6et93fJBHbySG7CC-VQCSKdMkjjZTuFFuyzeQEUEgV1yG7xTIIEV49aP_t0_edi5dB2ZABGHqNLMdKX65uZzTji9UTTB2YpVMvM1uU5s1gxhMIzCB_E3a3JQixpAm9wkNErS_BmmAA/http%3A%2F%2Fwww.sbicaps.com



354

Investors may be subject to adverse foreign, state or local tax or legal consequences as a result of trading in the

Rights Entitlements. Investors who intend to trade in the Rights Entitlements should consult their tax advisor or

stock broker regarding any cost, applicable taxes, charges and expenses (including brokerage) that may be levied

for trading in Rights Entitlements. The Lead Managers and our Company accept no responsibility to bear or pay

any cost, applicable taxes, charges and expenses (including brokerage), and such costs will be incurred solely by

the Investors.

(a) On Market Renunciation

The Investors may renounce the Rights Entitlements, credited to their respective demat accounts by

trading/selling them on the secondary market platform of the Stock Exchanges through a registered stock

broker in the same manner as the existing Equity Shares of our Company.

In this regard, in terms of provisions of the SEBI ICDR Regulations and the SEBI Rights Issue Circulars,

the Rights Entitlements credited to the respective demat accounts of the Eligible Equity Shareholders shall

be admitted for trading on the Stock Exchanges under the ISIN INE774D20016, subject to requisite

approvals. The details for trading in Rights Entitlements will be as specified by the Stock Exchanges from

time to time.

The Rights Entitlements are tradable in dematerialized form only. The market lot for trading of Rights

Entitlements is 1 (one) Rights Entitlements.

The On Market Renunciation shall take place only during the Renunciation Period for On Market

Renunciation, i.e., from Tuesday, July 28, 2020 to Friday, August 7, 2020 (both days inclusive).

The Investors holding the Rights Entitlements who desire to sell their Rights Entitlements will have to do

so through their registered stock brokers by quoting the ISIN INE774D20016 and indicating the details of

the Rights Entitlements they intend to sell. The Investors can place order for sale of Rights Entitlements

only to the extent of Rights Entitlements available in their demat account.

The On Market Renunciation shall take place electronically on secondary market platform of BSE and NSE

under automatic order matching mechanism and on ‘T+2 rolling settlement basis’, where ‘T’ refers to the

date of trading. The transactions will be settled on trade-for-trade basis. Upon execution of the order, the

stock broker will issue a contract note in accordance with the requirements of the Stock Exchanges and

SEBI.

(b) Off Market Renunciation

The Investors may renounce the Rights Entitlements, credited to their respective demat accounts by way of

an off-market transfer through a depository participant. The Rights Entitlements can be transferred in

dematerialised form only.

Eligible Equity Shareholders are requested to ensure that renunciation through off-market transfer is

completed in such a manner that the Rights Entitlements are credited to the demat account of the

Renouncees on or prior to the Issue Closing Date.

The Investors holding the Rights Entitlements who desire to transfer their Rights Entitlements will have to

do so through their depository participant by issuing a delivery instruction slip quoting the ISIN

INE774D20016, the details of the buyer and the details of the Rights Entitlements they intend to transfer.

The buyer of the Rights Entitlements (unless already having given a standing receipt instruction) has to

issue a receipt instruction slip to their depository participant. The Investors can transfer Rights Entitlements

only to the extent of Rights Entitlements available in their demat account.

The instructions for transfer of Rights Entitlements can be issued during the working hours of the depository

participants and only during the Renunciation Period.

The detailed rules for transfer of Rights Entitlements through off-market transfer shall be as specified by

the NSDL and CDSL from time to time.

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PLEASE NOTE THAT APPLICATION ON PLAIN PAPER CANNOT BE SUBMITTED THROUGH R-

WAP.

The application on plain paper, duly signed by the Eligible Equity Shareholder including joint holders, in the same

order and as per specimen recorded with his bank, must reach the office of the Designated Branches of the SCSB

before the Issue Closing Date and should contain the following particulars:

1. Name of our Company, being Mahindra & Mahindra Financial Services Limited;

2. Name and address of the Eligible Equity Shareholder including joint holders (in the same order and as

per specimen recorded with our Company or the Depository);

3. Registered Folio Number/DP and Client ID No.;

4. Number of Equity Shares held as on Record Date;

5. Allotment option – only dematerialised form;

6. Number of Equity Shares entitled to;

7. Number of Equity Shares applied for within the Rights Entitlements;

8. Number of additional Equity Shares applied for, if any;

9. Total number of Equity Shares applied for;

10. Total amount paid at the rate of ₹ 50 per Equity Share;

11. Details of the ASBA Account such as the account number, name, address and branch of the relevant

SCSB;

12. In case of NR Eligible Equity Shareholders making an application with an Indian address, details of the

NRE/FCNR/NRO Account such as the account number, name, address and branch of the SCSB with

which the account is maintained;

13. Except for Applications on behalf of the Central or State Government, the residents of Sikkim and the

officials appointed by the courts, PAN of the Eligible Equity Shareholder and for each Eligible Equity

Shareholder in case of joint names, irrespective of the total value of the Equity Shares applied for

pursuant to this Issue;

14. Authorisation to the Designated Branches of the SCSB to block an amount equivalent to the Application

Money in the ASBA Account;

15. Signature of the Eligible Equity Shareholder (in case of joint holders, to appear in the same sequence and

order as they appear in the records of the SCSB);

16. In addition, all such Eligible Equity Shareholders are deemed to have accepted the following:

“I/ We understand that neither the Rights Entitlements nor the Equity Shares have been, or will be,

registered under the United States Securities Act of 1933, as amended (the “US Securities Act”), or any

United States state securities laws, and may not be offered, sold, resold or otherwise transferred within

the United States or to the territories or possessions thereof (the “United States”), except pursuant to

an exemption from, or in a transaction not subject to, the registration requirements of the US Securities

Act. I/ we understand the Equity Shares referred to in this application are being offered and sold (i) in

offshore transactions outside the United States in compliance with Regulation S under the US Securities

Act (“Regulation S”) to existing shareholders located in jurisdictions where such offer and sale of the

Equity Shares is permitted under laws of such jurisdictions and (ii) in the United States to “qualified

institutional buyers” (as defined in Rule 144A under the US Securities Act) (“U.S. QIBs”) pursuant to

Section 4(a)(2) of the US Securities Act. I/ we understand that the Issue is not, and under no

circumstances is to be construed as, an offering of any Equity Shares or Rights Entitlements for sale in

the United States, or as a solicitation therein of an offer to buy any of the said Equity Shares or Rights

356

Entitlements in the United States, except in each case to persons in the United States who are U.S.QIBs.

I/ we confirm that I am/ we are (a)(i) not in the United States and eligible to subscribe for the Equity

Shares under applicable securities laws or (ii) a U.S. QIB in the United States, (b) complying with laws

of jurisdictions applicable to such person in connection with the Issue, and (c) understand that neither

the Company, nor the Registrar, the Lead Managers or any other person acting on behalf of the Company

will accept subscriptions from any person, or the agent of any person, who appears to be, or who the

Company, the Registrar, the Lead Managers or any other person acting on behalf of the Company have

reason to believe is in the United States (other than U.S. QIBs), or if such person is outside of India and

the United States, such person is not a foreign corporate or institutional shareholder, or is ineligible to

participate in this Issue under the securities laws of their jurisdiction.

I/ We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in

any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person

to whom it is unlawful to make such offer, sale or invitation. I/ We satisfy, and each account for which I/

we are acting satisfies, (a) all suitability standards for investors in investments of the type subscribed for

herein imposed by the jurisdiction of my/our residence, and (b) is eligible to subscribe and is subscribing

for the Equity Shares and Rights Entitlements in compliance with applicable securities and other laws of

our jurisdiction of residence.

For Resident Applicants: I/we hereby make the representations, warranties, acknowledgments and

agreements set forth in the section of the Letter of Offer titled “Restrictions on Purchases and Resales”

under the sub-heading “– United States – For Investors Outside of the United States” on page 381 (if I

am/we are outside the United States).

For Non-Resident Applicants: I/we hereby make the representations, warranties, acknowledgments and

agreements set forth in the section of the Letter of Offer titled “Restrictions on Purchases and Resales”

under the sub-heading “– United States – For Investors in the United States” (if I am/we are in the

United States) or under the sub-heading “– United States – For Investors Outside of the United States”

(if I am/we are outside the United States).

I/ We understand and agree that the Rights Entitlements and Equity Shares may not be reoffered, resold,

pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or

otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements

of the US Securities Act.

I/ We acknowledge that the Lead Managers, its affiliates and others will rely upon the truth and accuracy

of the foregoing representations and agreements.”

In cases where multiple Application Forms are submitted for Applications pertaining to Rights Entitlements

credited to the same demat account or in demat suspense escrow account, including cases where an Investor

submits Application Forms along with a plain paper Application, such Applications shall be liable to be rejected.

Investors are requested to strictly adhere to these instructions. Failure to do so could result in an Application being

rejected, with our Company, the Lead Managers and the Registrar not having any liability to the Investor. The

plain paper Application format will be available on the website of the Registrar at

https://rights.kfintech.com/mahindra.

Our Company, the Lead Managers and the Registrar shall not be responsible if the Applications are not uploaded

by SCSB or funds are not blocked in the Investors’ ASBA Accounts on or before the Issue Closing Date.

PLEASE NOTE THAT NON-RESIDENT ELIGIBLE EQUITY SHAREHOLDERS, WHO HOLD

EQUITY SHARES IN PHYSICAL FORM AS ON RECORD DATE AND WHO HAVE NOT

FURNISHED THE DETAILS OF THEIR RESPECTIVE DEMAT ACCOUNTS TO THE REGISTRAR

OR OUR COMPANY AT LEAST TWO WORKING DAYS PRIOR TO THE ISSUE CLOSING DATE,

SHALL NOT BE ELIGIBLE TO MAKE AN APPLICATION FOR EQUITY SHARES AGAINST THEIR

RIGHTS ENTITLEMENTS WITH RESPECT TO THE EQUITY SHARES HELD IN PHYSICAL

FORM.


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For details of credit of the Equity Shares to such resident Eligible Equity Shareholders, see “- Credit and Transfer

of Equity Shares in case of Shareholders holding Equity Shares in Physical Form and disposal of Equity Shares

for non-receipt of demat account details in a timely manner” on page 366.

Allotment of the Equity Shares in Dematerialized Form

PLEASE NOTE THAT THE EQUITY SHARES APPLIED FOR IN THIS ISSUE CAN BE ALLOTTED

ONLY IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH

OUR EQUITY SHARES ARE HELD BY SUCH INVESTOR ON THE RECORD DATE. FOR DETAILS,

SEE “ALLOTMENT ADVICE OR REFUND/ UNBLOCKING OF ASBA ACCOUNTS” ON PAGE 366.

General instructions for Investors

(a) Please read this Letter of Offer carefully to understand the Application process and applicable settlement

process.

(b) In accordance with the SEBI Rights Issue Circulars, (a) the Eligible Equity Shareholders, who hold

Equity Shares in physical form as on Record Date; or (b) the Eligible Equity Shareholders, who hold

Equity Shares in physical form as on Record Date and who have not furnished the details of their demat

account to the Registrar or our Company at least two Working Days prior to the Issue Closing Date,

desirous of subscribing to Equity Shares may also apply in this Issue during the Issue Period. Such

Eligible Equity Shareholders must check the procedure for Application by and credit of Equity Shares in

“- Procedure for Application by Eligible Equity Shareholders holding Equity Shares in physical form”

and “- Credit and Transfer of Equity Shares in case of Shareholders holding Equity Shares in Physical

Form and disposal of Equity Shares for non-receipt of demat account details in a timely manner” on


(c) Please read the instructions on the Application Form sent to you.

(d) The Application Form can be used by both the Eligible Equity Shareholders and the Renouncees.

(e) Application should be made only through the ASBA facility or using R-WAP.

(f) Application should be complete in all respects. The Application Form found incomplete with regard to

any of the particulars required to be given therein, and/or which are not completed in conformity with

the terms of this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement Letter and the

Application Form are liable to be rejected. The Application Form must be filled in English.

(g) In case of non-receipt of Application Form, Application can be made on plain paper mentioning all

necessary details as mentioned under the section “- Application on Plain Paper under ASBA process” on

page 350.

(h) In accordance with Regulation 76 of the SEBI ICDR Regulations, SEBI Rights Issue Circulars and ASBA

Circulars, all Investors desiring to make an Application in this Issue are mandatorily required to use either

the ASBA process or the optional mechanism instituted only for resident individual Investors in this

Issue, i.e., R-WAP. Investors should carefully read the provisions applicable to such Applications before

making their Application through ASBA or using the R-WAP.

(i) An Investor, wishing to participate in this Issue through the ASBA facility, is required to have an ASBA

enabled bank account with an SCSB, prior to making the Application.

(j) In case of Application through R-WAP, the Investors should enable the internet banking or UPI facility

of their respective bank accounts.

(k) Applications should be (i) submitted to the Designated Branches of the SCSB or made online/electronic

through the website of the SCSBs (if made available by such SCSB) for authorising such SCSB to block

Application Money payable on the Application in their respective ASBA Accounts, or (ii) filled on the

R-WAP. Please note that on the Issue Closing Date, (i) Applications through ASBA process will be

uploaded until 5.00 p.m. (Indian Standard Time) or such extended time as permitted by the Stock

358

Exchanges, and (ii) the R-WAP facility will be available until 5.00 p.m. (Indian Standard Time) or such

extended time as permitted by the Stock Exchanges.

(l) Applications should not be submitted to the Bankers to the Issue or Escrow Collection Bank (assuming

that such Escrow Collection Bank is not an SCSB), our Company or the Registrar or the Lead Managers.

(m) In case of Application through ASBA facility, Investors are required to provide necessary details,

including details of the ASBA Account, authorization to the SCSB to block an amount equal to the

Application Money in the ASBA Account mentioned in the Application Form.

(n) All Applicants, and in the case of Application in joint names, each of the joint Applicants, should mention

their PAN allotted under the Income-tax Act, irrespective of the amount of the Application. Except for

Applications on behalf of the Central or the State Government, the residents of Sikkim and the officials

appointed by the courts, Applications without PAN will be considered incomplete and are liable to

be rejected. With effect from August 16, 2010, the demat accounts for Investors for which PAN

details have not been verified shall be “suspended for credit” and no Allotment and credit of Equity

Shares pursuant to this Issue shall be made into the accounts of such Investors.

(o) In case of Application through ASBA facility, all payments will be made only by blocking the amount

in the ASBA Account. Furthermore, in case of Applications submitted using the R-WAP facility,

payments shall be made using internet banking or UPI facility. Cash payment or payment by cheque or

demand draft or pay order or NEFT or RTGS or through any other mode is not acceptable for application

through ASBA process. In case payment is made in contravention of this, the Application will be deemed

invalid and the Application Money will be refunded and no interest will be paid thereon.

(p) For physical Applications through ASBA at Designated Branches of SCSB, signatures should be either

in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India.

Signatures other than in any such language or thumb impression must be attested by a Notary Public or

a Special Executive Magistrate under his/her official seal. The Investors must sign the Application as per

the specimen signature recorded with the SCSB.

(q) In case of joint holders and physical Applications through ASBA process, all joint holders must sign the

relevant part of the Application Form in the same order and as per the specimen signature(s) recorded

with the SCSB. In case of joint Applicants, reference, if any, will be made in the first Applicant’s name

and all communication will be addressed to the first Applicant.

(r) All communication in connection with Application for the Equity Shares, including any change in address

of the Eligible Equity Shareholders should be addressed to the Registrar prior to the date of Allotment in

this Issue quoting the name of the first/sole Applicant, folio numbers/DP ID and Client ID and

Application Form number, as applicable. In case of any change in address of the Eligible Equity

Shareholders, the Eligible Equity Shareholders should also send the intimation for such change to the

respective depository participant, or to our Company or the Registrar in case of Eligible Equity

Shareholders holding Equity Shares in physical form.

(s) Only persons (i) in the United States who are U.S. QIBs and (b) outside India and the United States who

are foreign corporate or institutional shareholders located in jurisdictions where the offer and sale of the

Equity Shares is permitted under laws of such jurisdictions.

(t) Please note that subject to SCSBs complying with the requirements of SEBI Circular No.

CIR/CFD/DIL/13/2012 dated September 25, 2012 within the periods stipulated therein, Applications

made through ASBA facility may be submitted at the Designated Branches of the SCSBs. Application

through ASBA facility in electronic mode will only be available with such SCSBs who provide such

facility.

(u) In terms of the SEBI circular CIR/CFD/DIL/1/2013 dated January 2, 2013, it is clarified that for making

applications by banks on their own account using ASBA facility, SCSBs should have a separate account

in own name with any other SEBI registered SCSB(s). Such account shall be used solely for the purpose

of making application in public/ rights issues and clear demarcated funds should be available in such

account for ASBA applications.

359

(v) Investors are required to ensure that the number of Equity Shares applied for by them do not exceed the

prescribed limits under the applicable law.

(w) An Applicant being an OCB is required not to be under the adverse notice of RBI and must submit

approval from RBI for applying in this Issue.

Do’s:

(a) Ensure that the Application Form and necessary details are filled in.

(b) Except for Application submitted on behalf of the Central or the State Government, residents of Sikkim

and the officials appointed by the courts, each Applicant should mention their PAN allotted under the

Income-tax Act.

(c) Ensure that the demographic details such as address, PAN, DP ID, Client ID, bank account details and

occupation (“Demographic Details”) are updated, true and correct, in all respects.

(d) Investors should provide correct DP ID and client ID/ folio number while submitting the Application.

Such DP ID and Client ID/ folio number should match the demat account details in the records available

with Company and/or Registrar, failing which such Application is liable to be rejected. Investor will be

solely responsible for any error or inaccurate detail provided in the Application. Our Company, the Lead

Managers, SCSBs or the Registrar will not be liable for any such rejections.

Don’ts:

(a) Do not apply if you are ineligible to participate in this Issue under the securities laws applicable to your

jurisdiction.

(b) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this

ground.

(c) Avoid applying on the Issue Closing Date due to risk of delay/ restrictions in making any physical

Application.

(d) Do not pay the Application Money in cash, by money order, pay order or postal order.

(e) Do not submit multiple Applications.

Do’s for Investors applying through ASBA:

(a) Ensure that the details about your Depository Participant and beneficiary account are correct and the

beneficiary account is activated as the Equity Shares will be Allotted in the dematerialized form only.

(b) Ensure that the Applications are submitted with the Designated Branches of the SCSBs and details of the

correct bank account have been provided in the Application.

(c) Ensure that there are sufficient funds (equal to {number of Equity Shares (including additional Equity

Shares) applied for} X {Application Money of Equity Shares }) available in ASBA Account mentioned

in the Application Form before submitting the Application to the respective Designated Branches of the

SCSB.

(d) Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on

application mentioned in the Application Form, in the ASBA Account, of which details are provided in

the Application and have signed the same.

(e) Ensure that you have a bank account with an SCSB providing ASBA facility in your location and the

Application is made through that SCSB providing ASBA facility in such location.

(f) Ensure that you receive an acknowledgement from the Designated Branches of the SCSB for your

submission of the Application Form in physical form or plain paper Application.

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(g) Ensure that the name(s) given in the Application Form is exactly the same as the name(s) in which the

beneficiary account is held with the Depository Participant. In case the Application Form is submitted in

joint names, ensure that the beneficiary account is also held in same joint names and such names are in

the same sequence in which they appear in the Application Form and the Rights Entitlement Letter.

Do’s for Investors applying through R-WAP:

(a) Ensure that the details of the correct bank account have been provided while making payment along with

submission of the Application.

(b) Ensure that there are sufficient funds (equal to {number of Equity Shares (including additional Equity

Shares) applied for} X {Application Money of Equity Shares }) available in the bank account through

which payment is made using the R-WAP.

(c) Ensure that you make the payment towards your application through your bank account only and not use

any third party bank account for making the payment

(d) Ensure that you receive a confirmation email on successful transfer of funds.

(e) Ensure you have filled in correct details of PAN, folio number, DP ID and Client ID, as applicable, and

all such other details as may be required.

(f) Ensure that you receive an acknowledgement from the R-WAP for your submission of the Application.

Don’ts for Investors applying through ASBA:

(a) Do not submit the Application Form after you have submitted a plain paper Application to a Designated

Branches of the SCSB or vice versa.

(b) Do not send your physical Application to the Lead Managers, the Registrar, the Escrow Collection Bank

(assuming that such Escrow Collection Bank is not an SCSB), a branch of the SCSB which is not a

Designated Branch of the SCSB or our Company; instead submit the same to a Designated Branch of the

SCSB only.

(c) Do not instruct the SCSBs to unblock the funds blocked under the ASBA process.

Don’ts for Investors applying through R-WAP:

(a) Do not apply from bank account of third parties.

(b) Do not apply if you are a non-resident Investor.

(c) Do not apply from non-resident account.

Grounds for Technical Rejection

Applications made in this Issue are liable to be rejected on the following grounds:

(a) DP ID and Client ID mentioned in Application not matching with the DP ID and Client ID records

available with the Registrar.

(b) Sending an Application to the Lead Managers, Registrar, Escrow Collection Banks (assuming that such

Escrow Collection Bank is not a SCSB), to a branch of a SCSB which is not a Designated Branch of the

SCSB or our Company.

(c) Insufficient funds are available in the ASBA Account with the SCSB for blocking the Application

Money.

(d) Funds in the ASBA Account whose details are mentioned in the Application Form having been frozen

pursuant to regulatory orders.

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(e) Account holder not signing the Application or declaration mentioned therein.

(f) Submission of more than one application Form for Rights Entitlements available in a particular demat

account.

(g) Multiple Application Forms, including cases where an Investor submits Application Forms along with a

plain paper Application.

(h) Submitting the GIR number instead of the PAN (except for Applications on behalf of the Central or State

Government, the residents of Sikkim and the officials appointed by the courts).

(i) Applications by persons not competent to contract under the Indian Contract Act, 1872, except

Applications by minors having valid demat accounts as per the demographic details provided by the

Depositories.

(j) Applications by SCSB on own account, other than through an ASBA Account in its own name with any

other SCSB.

(k) Application Forms which are not submitted by the Investors within the time periods prescribed in the

Application Form and this Letter of Offer.

(l) Physical Application Forms not duly signed by the sole or joint Investors.

(m) Application Forms accompanied by stock invest, outstation cheques, post-dated cheques, money order,

postal order or outstation demand drafts.

(n) If an Investor is (a) debarred by SEBI; or (b) if SEBI has revoked the order or has provided any interim

relief then failure to attach a copy of such SEBI order allowing the Investor to subscribe to their Rights

Entitlements.

(o) Applications which: (i) appears to our Company or its agents to have been executed in, electronically

transmitted from or dispatched from the United States (unless the Application Form is submitted by a

U.S. QIB in the United States) or other jurisdictions where the offer and sale of the Equity Shares is not

permitted under laws of such jurisdictions; (ii) does not include the relevant certifications set out in the

Application Form, including to the effect that the person submitting and/or renouncing the Application

Form is (a) outside India and the United States and is a foreign corporate or institutional shareholder

eligible to subscribe for the Equity Shares under applicable securities laws or (b) a U.S. QIB in the United

States, and in each case such person is complying with laws of jurisdictions applicable to such person in

connection with this Issue; or (iii) where either a registered Indian address is not provided or where our

Company believes acceptance of such Application Form may infringe applicable legal or regulatory

requirements; and our Company shall not be bound to issue or allot any Equity Shares in respect of any

such Application Form.

(p) Applications which have evidence of being executed or made in contravention of applicable securities

laws.

Applications under the R-WAP process are liable to be rejected on the following grounds (in addition to above

applicable grounds):

(a) Applications by non-resident Investors.

(b) Payment from third party bank accounts.

Depository account and bank details for Investors holding Equity Shares in demat accounts and applying

in this Issue

IT IS MANDATORY FOR ALL THE INVESTORS APPLYING UNDER THIS ISSUE TO APPLY

THROUGH THE ASBA PROCESS OR THROUGH THE R-WAP PROCESS (AVAILABLE ONLY FOR

RESIDENT INDIVIDUAL INVESTORS), TO RECEIVE THEIR EQUITY SHARES IN

DEMATERIALISED FORM AND TO THE SAME DEPOSITORY ACCOUNT/ CORRESPONDING

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PAN IN WHICH THE EQUITY SHARES ARE HELD BY THE INVESTOR AS ON THE RECORD

DATE. ALL INVESTORS APPLYING UNDER THIS ISSUE SHOULD MENTION THEIR

DEPOSITORY PARTICIPANT’S NAME, DP ID AND BENEFICIARY ACCOUNT NUMBER/ FOLIO

NUMBER IN THE APPLICATION FORM. INVESTORS MUST ENSURE THAT THE NAME GIVEN

IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE

DEPOSITORY ACCOUNT IS HELD. IN CASE THE APPLICATION FORM IS SUBMITTED IN JOINT

NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE

SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE

APPLICATION FORM OR PLAIN PAPER APPLICATIONS, AS THE CASE MAY BE.

Investors applying under this Issue should note that on the basis of name of the Investors, Depository

Participant’s name and identification number and beneficiary account number provided by them in the

Application Form or the plain paper Applications, as the case may be, the Registrar will obtain

Demographic Details from the Depository. Hence, Investors applying under this Issue should carefully fill

in their Depository Account details in the Application.

These Demographic Details would be used for all correspondence with such Investors including mailing of the

letters intimating unblocking of bank account of the respective Investor and/or refund. The Demographic Details

given by the Investors in the Application Form would not be used for any other purposes by the Registrar. Hence,

Investors are advised to update their Demographic Details as provided to their Depository Participants.

By signing the Application Forms, the Investors would be deemed to have authorised the Depositories to provide,

upon request, to the Registrar, the required Demographic Details as available on its records.

The Allotment advice and the email intimating unblocking of ASBA Account or refund (if any) would be

emailed to the address of the Investor as per the email address provided to our Company or the Registrar

or Demographic Details received from the Depositories. The Registrar will give instructions to the SCSBs

for unblocking funds in the ASBA Account to the extent Equity Shares are not Allotted to such Investor.

Please note that any such delay shall be at the sole risk of the Investors and none of our Company, the

SCSBs, Registrar or the Lead Managers shall be liable to compensate the Investor for any losses caused

due to any such delay or be liable to pay any interest for such delay.

In case no corresponding record is available with the Depositories that match three parameters, (a) names of the

Investors (including the order of names of joint holders), (b) the DP ID, and (c) the beneficiary account number,

then such Application Forms s are liable to be rejected.

Modes of Payment

In case of Application through ASBA facility, the Investor agrees to block the entire amount payable on

Application with the submission of the Application Form, by authorizing the SCSB to block an amount, equivalent

to the amount payable on Application, in the Investor’s ASBA Account.

After verifying that sufficient funds are available in the ASBA Account details of which are provided in the

Application Form, the SCSB shall block an amount equivalent to the Application Money mentioned in the

Application Form until the Transfer Date. On the Transfer Date, upon receipt of intimation from the Registrar, of

the receipt of minimum subscription and pursuant to the finalization of the Basis of Allotment as approved by the

Designated Stock Exchange, the SCSBs shall transfer such amount as per the Registrar’s instruction from the

ASBA Account into the Allotment Account which shall be a separate bank account maintained by our Company,

other than the bank account referred to in sub-section (3) of Section 40 of the Companies Act, 2013. The balance

amount remaining after the finalisation of the Basis of Allotment on the Transfer Date shall be unblocked by the

SCSBs on the basis of the instructions issued in this regard by the Registrar to the respective SCSB.

The Investors would be required to give instructions to the respective SCSBs to block the entire amount payable

on their Application at the time of the submission of the Application Form.

The SCSB may reject the application at the time of acceptance of Application Form if the ASBA Account, details

of which have been provided by the Investor in the Application Form does not have sufficient funds equivalent to

the amount payable on Application mentioned in the Application Form. Subsequent to the acceptance of the

Application by the SCSB, our Company would have a right to reject the Application on technical grounds as set

forth hereinafter.

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All payments against the Application Forms shall be made only through ASBA facility or internet banking or UPI

facility if applying through R-WAP. The Registrar will not accept any payments against the Application Forms,

if such payments are not made through ASBA facility or internet banking or UPI facility if applying through R-

WAP.

For details of mode of payment in case of Application through R-WAP, see “- Procedure for Application through

the R-WAP” on page 350.

Mode of payment for Resident Investors

All payments on the Application Forms shall be made only through ASBA facility or internet banking or UPI

facility if applying through R-WAP. Applicants are requested to strictly adhere to these instructions.

Mode of payment for Non-Resident Investors

As regards the Application by non-resident Investors, the following conditions shall apply:

1. Individual non-resident Indian Applicants who are permitted to subscribe to Equity Shares by applicable

local securities laws can obtain Application Forms on the websites of the Registrar, our Company and

the Lead Managers.

Note: Applications from non-resident Investors in any jurisdiction outside India will not be accepted

unless such person is a corporate or institutional shareholder. In case of non-resident Eligible Equity

Shareholders, the Abridged Letter of Offer, the Rights Entitlement Letter and the Application Form shall

be sent/ dispatched only to the Indian addresses of the non-resident Eligible Equity Shareholders, on a

reasonable effort basis, who have provided an Indian address to our Company and located in certain

jurisdictions where the offer and sale of the Equity Shares may be permitted under laws of such

jurisdictions. This Letter of Offer will be sent/ dispatched (i) only to e-mail addresses of resident Eligible

Equity Shareholders who have provided their e-mail addresses; (ii) only to the Indian addresses of the

resident Eligible Equity Shareholders, on a reasonable effort basis. whose e-mail addresses are not

available with the Company or the Eligible Equity Shareholders have not provided the valid e-mail

address to the Company; (iii) only to the Indian addresses of the non-resident Eligible Equity

Shareholders, on a reasonable effort basis, who have provided an Indian address to our Company and

located in jurisdictions where the offer and sale of the Equity Shares may be permitted under laws of

such jurisdictions, by the Registrar on behalf of our Company or the Lead Managers in each case who

make a request in this regard.

2. Application Forms will not be accepted from non-resident Investors in any jurisdiction where the offer

or sale of the Rights Entitlements and Equity Shares may be restricted by applicable securities laws.

3. Payment by non-residents must be made only through ASBA facility and using permissible accounts in

accordance with FEMA, FEMA Rules and requirements prescribed by RBI.

Notes:

1. In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the

investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to the

Income-tax Act.

2. In case Equity Shares are Allotted on a non-repatriation basis, the dividend and sale proceeds of the

Equity Shares cannot be remitted outside India.

3. In case of an Application Form received from non-residents, Allotment, refunds and other distribution,

if any, will be made in accordance with the guidelines and rules prescribed by RBI as applicable at the

time of making such Allotment, remittance and subject to necessary approvals.

4. Application Forms received from non-residents/ NRIs, or persons of Indian origin residing abroad for

Allotment of Equity Shares shall, amongst other things, be subject to conditions, as may be imposed from

time to time by RBI under FEMA, in respect of matters including Refund of Application Money and

Allotment.

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5. In the case of NRIs who remit their Application Money from funds held in FCNR/NRE Accounts, refunds

and other disbursements, if any shall be credited to such account.

6. Non-resident Renouncees who are not Eligible Equity Shareholders must submit regulatory approval for

applying for additional Equity Shares in the Issue.

Multiple Applications

In case where multiple Applications are made using same demat account, such Applications shall be liable to be

rejected. A separate Application can be made in respect of Rights Entitlements in each demat account of the

Investors and such Applications shall not be treated as multiple applications. Similarly, a separate Application can

be made against Equity Shares held in dematerialized form and Equity Shares held in physical form, and such

Applications shall not be treated as multiple applications. A separate Application can be made in respect of each

scheme of a mutual fund registered with SEBI and such Applications shall not be treated as multiple applications.

For details, see “- Procedure for Applications by Mutual Funds” on page 371.

In cases where multiple Application Forms are submitted, including cases where an Investor submits Application

Forms along with a plain paper Application or multiple plain paper Applications or multiple applications on R-

WAP as well as through ASBA, such Applications shall be treated as multiple applications and are liable to be

rejected, other than multiple applications submitted by any of our Promoter or members of Promoter Group to

meet the minimum subscription requirements applicable to this Issue as described in “Capital Structure -

Subscription to this Issue by our Promoter and Promoter Group” on page 82.

Last date for Application

The last date for submission of the duly filled in the Application Form or a plain paper Application is Tuesday,

August 11, 2020 i.e., Issue Closing Date. Our Board or any committee thereof may extend the said date for such

period as it may determine from time to time, subject to the Issue Period not exceeding 30 days from the Issue

Opening Date (inclusive of the Issue Opening Date).

If the Application Form is not submitted with an SCSB, uploaded with the Stock Exchanges and the Application

Money is not blocked with the SCSB or if the Application Form is not accepted at the R-WAP, on or before the

Issue Closing Date or such date as may be extended by our Board or any committee thereof, the invitation to offer

contained in this Letter of Offer shall be deemed to have been declined and our Board or any committee thereof

shall be at liberty to dispose of the Equity Shares hereby offered, as provided under the section, “- Basis of

Allotment” on page 365.

Please note that on the Issue Closing Date, (i) Applications through ASBA process will be uploaded until 5.00

p.m. (Indian Standard Time) or such extended time as permitted by the Stock Exchanges, and (ii) the R-WAP

facility will be available until 5.00 p.m. (Indian Standard Time) or such extended time as permitted by the Stock

Exchanges.

Please ensure that the Application Form and necessary details are filled in. In place of Application number,

Investors can mention the reference number of the e-mail received from Registrar informing about their Rights

Entitlement or last eight digits of the demat account. Alternatively, SCSBs may mention their internal reference

number in place of application number.

Withdrawal of Application

An Investor who has applied in this Issue may withdraw their Application at any time during Issue Period by

approaching the SCSB where application is submitted or sending the email withdrawal request to

[email protected] in case of Application through R-WAP facility. However, no Investor, whether

applying through ASBA facility or R-WAP facility, may withdraw their Application post the Issue Closing Date.

Issue Schedule

ISSUE OPENING DATE Tuesday, July 28, 2020

LAST DATE FOR ON MARKET RENUNCIATION OF RIGHTS

ENTITLEMENT*

Friday, August 7, 2020

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LAST DATE FOR CREDIT OF RIGHTS ENTITLEMENTS Monday, August 10, 2020

ISSUE CLOSING DATE^ Tuesday, August 11, 2020

FINALISATION OF BASIS OF ALLOTMENT (ON OR ABOUT) Thursday, August 20, 2020

DATE OF ALLOTMENT (ON OR ABOUT) Friday, August 21, 2020

DATE OF CREDIT (ON OR ABOUT) Tuesday, August 25, 2020

DATE OF LISTING (ON OR ABOUT) Thursday, August 27, 2020

* Eligible Equity Shareholders are requested to ensure that renunciation through off-market transfer is

completed in such a manner that the Rights Entitlements are credited to the demat account of the Renouncees on

or prior to the Issue Closing Date. ^Our Board or a duly authorized committee thereof will have the right to extend the Issue Period as it may

determine from time to time, provided that this Issue will not remain open in excess of 30 days from the Issue

Opening Date (inclusive of the Issue Opening Date). Further, no withdrawal of Application shall be permitted

by any Applicant after the Issue Closing Date.

Please note that if Eligible Equity Shareholders holding Equity Shares in physical form as on Record Date, have

not provided the details of their demat accounts to our Company or to the Registrar, they are required to provide

their demat account details to our Company or the Registrar not later than two Working Days prior to the Issue

Closing Date, i.e., Friday, August 7, 2020 to enable the credit of the Rights Entitlements by way of transfer from

the demat suspense escrow account to their respective demat accounts, at least one day before the Issue Closing

Date.

For details, see “General Information - Issue Schedule” on page 70.

Our Board may however decide to extend the Issue Period as it may determine from time to time but not exceeding

30 days from the Issue Opening Date (inclusive of the Issue Opening Date).

Basis of Allotment

Subject to the provisions contained in this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement

Letter, the Application Form, the Articles of Association and the approval of the Designated Stock Exchange, our

Board will proceed to Allot the Equity Shares in the following order of priority:

(a) Full Allotment to those Eligible Equity Shareholders who have applied for their Rights Entitlements of

Equity Shares either in full or in part and also to the Renouncee(s) who has or have applied for Equity

Shares renounced in their favour, in full or in part.

(b) Allotment to the Eligible Equity Shareholders who having applied for all the Equity Shares offered to

them as part of this Issue, have also applied for additional Equity Shares. The Allotment of such

additional Equity Shares will be made as far as possible on an equitable basis having due regard to the

number of Equity Shares held by them on the Record Date, provided there are any unsubscribed Equity

Shares after making full Allotment in (a) and (b) above. The Allotment of such Equity Shares will be at

the sole discretion of our Board in consultation with the Designated Stock Exchange, as a part of this

Issue and will not be a preferential allotment.

(c) Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have

applied for additional Equity Shares in the Issue, provided there is surplus available after making full

Allotment under (a), (b) and (c) above. The Allotment of such Equity Shares will be made on a

proportionate basis in consultation with the Designated Stock Exchange, as a part of this Issue and will

not be a preferential allotment.

(d) Allotment to any other person, that our Board may deem fit, provided there is surplus available after

making Allotment under (a), (b), (c) and (d) above, and the decision of our Board in this regard shall be

final and binding.

After taking into account Allotment to be made under (a) to (d) above, if there is any unsubscribed portion, the

same shall be deemed to be ‘unsubscribed’.

Upon approval of the Basis of Allotment by the Designated Stock Exchange, the Registrar shall send to the

Controlling Branches, a list of the Investors who have been allocated Equity Shares in this Issue, along with:

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1. The amount to be transferred from the ASBA Account to the separate bank account opened by our

Company for this Issue, for each successful Application;

2. The date by which the funds referred to above, shall be transferred to the aforesaid bank account; and

3. The details of rejected ASBA applications, if any, to enable the SCSBs to unblock the respective ASBA

Accounts.

For Applications through R-WAP, instruction will be sent to Escrow Collection Bank with list of Allottees and

corresponding amount to be transferred to the Allotment Account. Further, the list of Applicants eligible for refund

with corresponding amount will also be shared with Escrow Collection Bank to refund such Applicants.

Allotment Advice or Refund/ Unblocking of ASBA Accounts

Our Company will email Allotment advice, refund intimations (including in respect of Applications made through

R-WAP facility) or demat credit of securities and/or letters of regret, along with crediting the Allotted Equity

Shares to the respective beneficiary accounts (only in dematerialised mode) or in a demat suspense account (in

respect of Eligible Equity Shareholders holding Equity Shares in physical form on the Allotment Date) or

unblocking the funds in the respective ASBA Accounts, if any, within a period of 15 days from the Issue Closing

Date. In case of failure to do so, our Company shall pay interest at 15% p.a. and such other rate as specified under

applicable law from the expiry of such 15 days’ period.

In case of Applications through R-WAP, refunds, if any, will be made to the same bank account from which

Application Money was received. Therefore, the Investors should ensure that such bank accounts remain valid

and active.

The Rights Entitlements will be credited in the dematerialized form using electronic credit under the depository

system and the Allotment advice shall be sent, through email, to the email address provided to our Company or at

the address recorded with the Depository.

In the case of non-resident Investors who remit their Application Money from funds held in the NRE or the FCNR

Accounts, refunds and/or payment of interest or dividend and other disbursements, if any, shall be credited to such

accounts.

Where an Applicant has applied for additional Equity Shares in the Issue and is Allotted a lesser number of Equity

Shares than applied for, the excess Application Money paid/blocked shall be refunded/unblocked. The un-

blocking of ASBA funds / refund of monies shall be completed be within such period as prescribed under the

SEBI ICDR Regulations. In the event that there is a delay in making refunds beyond such period as prescribed

under applicable law, our Company shall pay the requisite interest at such rate as prescribed under applicable law.

Credit and Transfer of Equity Shares in case of Shareholders holding Equity Shares in Physical Form and

disposal of Equity Shares for non-receipt of demat account details in a timely manner

In case of Allotment to resident Eligible Equity Shareholders who hold Equity Shares in physical form as on

Record Date, have paid the Application Money and have not provided the details of their demat account to the

Registrar or our Company at least two Working Days prior to the Issue Closing Date, the following procedure

shall be adhered to:

(a) the Registrar shall send Allotment advice and credit the Equity Shares to a demat suspense account to be

opened by our Company;

(b) within 6 (six) months from the Allotment Date, such Eligible Equity Shareholders shall be required to

send a communication to our Company or the Registrar containing the name(s), Indian address, email

address, contact details and the details of their demat account along with copy of self-attested PAN and

self-attested client master sheet of their demat account either by post, speed post, courier, electronic mail

or hand delivery;

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(c) Our Company (with the assistance of the Registrar) shall, after verification of the details of such demat

account by the Registrar, transfer the Equity Shares from the demat suspense account to the demat

accounts of such Eligible Equity Shareholders;

(d) In case of non-receipt of details of demat account as per (b) above, our Company shall conduct a sale of

such Equity Shares lying in the demat suspense account on the floor of the Stock Exchanges at the

prevailing market price and remit the proceeds of such sale (net of brokerage, applicable taxes and

administrative and incidental charges) to the bank account mentioned by the resident Eligible Equity

Shareholders in their respective Application Forms and from which the payment for Application Money

was made. In case such bank accounts cannot be identified due to any reason or bounce back from such

account, our Company may use payment mechanisms such as cheques, demand drafts, etc. to such

Eligible Equity Shareholders to remit such proceeds. For this purpose, our Company may also take steps

such as allowing a trust to dispose such Equity Shares and distribute the proceeds or undertake any other

related action as considered appropriate by our Company.

Such Equity Shares may be sold over such period of time as may be required, depending on liquidity and

other market conditions on the floor of the Stock Exchanges after the expiry of the period mentioned

under (b) above. Therefore, such proceeds (net of brokerage, applicable taxes and administrative and

incidental charges) by way of sale of such Equity Shares may be higher or lower than the Application

Money paid by such Eligible Equity Shareholders;

(e) Our Company shall send reminder notices seeking the requisite details of demat account prior to expiry

of time period under (b) above, in due course, to such resident Eligible Equity Shareholders who have

not provided the requisite details. After expiry of time period under (b) above, our Company or the

Registrar shall not accept any requests by such Eligible Equity Shareholders for updation of details of

demat account under any circumstances, including in case of failure to sell such Equity Shares;

(f) After the consummation of the sale of Equity Shares on the floor of the Stock Exchanges, our Company

shall send an intimation to the respective Eligible Equity Shareholders, giving details of such sale,

including the sale price and break-up of net brokerage, taxes and administrative and incidental charges;

and

(g) If at the time of transfer of sale proceeds for default cases, the bank account from which Application

Money was received is closed or non-operational, such sale proceeds will be transferred to IEPF in

accordance with practice on Equity Shares and as per applicable law.

(h) In case the details of demat account provided by the Eligible Equity Shareholders are not of his/ her own

demat account, the Equity Shares shall be subject to sale process specified under (d) above.

Notes:

1. Our Company will open a separate demat suspense account to credit the Equity Shares in respect of such

Eligible Equity Shareholders who hold Equity Shares in physical form as on Record Date and have not

provided details of their demat accounts to our Company or the Registrar, at least two Working Days

prior to the Issue Closing Date. Our Company, with the assistance of the Registrar, will initiate transfer

of such Equity Shares from the demat suspense account to the demat account of such Eligible Equity

Shareholders, upon receipt of details of demat accounts from the Eligible Equity Shareholders.

2. The Eligible Equity Shareholders cannot trade in such Equity Shares until the receipt of demat account

details and transfer to such Eligible Equity Shareholders’ respective account.

3. There will be no voting rights against such Equity Shares kept in the demat suspense account. However,

the respective Eligible Equity Shareholders will be eligible to receive dividends, if declared, in respect

of such Equity Shares, as permitted under applicable laws.

4. Investors may be subject to adverse foreign, state or local tax or legal consequences as a result of buying

or selling of Equity Shares or Rights Entitlements. The Eligible Equity Shareholders should obtain their

own independent tax and legal advice and may not rely on our Company or any of their affiliates

including any of their respective shareholders, directors, officers, employees, counsels, representatives,

agents or affiliates when evaluating the tax consequences in relation to the Equity Shares (including but

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not limited to any applicable short-term capital gains tax, or any other applicable taxes or charges in case

of any gains made by such Eligible Equity Shareholders from the sale of such Equity Shares).

5. The Lead Managers, our Company, its directors, its employees, affiliates, associates and their

respective directors and officers and the Registrar shall not be liable in any manner and not be

responsible for acts, mistakes, errors, omissions and commissions, etc., in relation to any delay in

furnishing details of demat account by such Eligible Equity Shareholders, any resultant loss to the

Eligible Equity Shareholders due to sale of the Equity Shares, if such details are not correct, demat

account is frozen or not active or in case of non-availability of details of bank account of such

Eligible Equity Shareholders, profit or loss to such Eligible Equity Shareholders due to aforesaid

process, tax deductions or other costs charged by our Company, or on account of aforesaid process

in any manner.

Payment of Refund

Mode of making refunds

The payment of refund, if any, including in the event of oversubscription or failure to list or otherwise would be

done through any of the following modes. Please note that payment of refund in case of Applications made through

R-WAP, shall be through modes under (b) to (g) below.

(a) Unblocking amounts blocked using ASBA facility.

(b) NACH – National Automated Clearing House is a consolidated system of electronic clearing service.

Payment of refund would be done through NACH for Applicants having an account at one of the centres

specified by RBI, where such facility has been made available. This would be subject to availability of

complete bank account details including MICR code wherever applicable from the depository. The

payment of refund through NACH is mandatory for Applicants having a bank account at any of the

centres where NACH facility has been made available by RBI (subject to availability of all information

for crediting the refund through NACH including the MICR code as appearing on a cheque leaf, from

the depositories), except where Applicant is otherwise disclosed as eligible to get refunds through NEFT

or Direct Credit or RTGS.

(c) National Electronic Fund Transfer (“NEFT”) – Payment of refund shall be undertaken through NEFT

wherever the Investors’ bank has been assigned the Indian Financial System Code (“IFSC Code”), which

can be linked to a MICR, allotted to that particular bank branch. IFSC Code will be obtained from the

website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR

numbers. Wherever the Investors have registered their nine digit MICR number and their bank account

number with the Registrar to our Company or with the Depository Participant while opening and

operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank

branch and the payment of refund will be made to the Investors through this method.

(d) Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to receive

refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne

by our Company.

(e) RTGS – If the refund amount exceeds ₹ 2,00,000, the Investors have the option to receive refund through

RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required

to provide the IFSC Code in the Application Form. In the event the same is not provided, refund shall be

made through NACH or any other eligible mode. Charges, if any, levied by the refund bank(s) for the

same would be borne by our Company. Charges, if any, levied by the Investor’s bank receiving the credit

would be borne by the Investor.

(f) For all other Investors, the refund orders will be dispatched through speed post or registered post subject

to applicable laws. Such refunds will be made by cheques, pay orders or demand drafts drawn in favor

of the sole/first Investor and payable at par.

(g) Credit of refunds to Investors in any other electronic manner, permissible by SEBI from time to time.

In case of Application through R-WAP, refunds, if any, will be made to the same bank account from which

Application Money was received. Therefore, the Investors should ensure that such bank accounts remain

valid and active.

369

Refund payment to non-residents

The Application Money will be unblocked in the ASBA Account of the non-resident Applicants, details of which

were provided in the Application Form.

Allotment Advice or Demat Credit of Securities

The demat credit of securities to the respective beneficiary accounts or the demat suspense account (pending

receipt of demat account details for Eligible Equity Shareholders holding Equity Shares in physical form/ with

IEPF authority/ in suspense, etc.) will be credited within 15 days from the Issue Closing Date or such other

timeline in accordance with applicable laws.

Receipt of the Equity Shares in Dematerialized Form

PLEASE NOTE THAT THE EQUITY SHARES APPLIED FOR UNDER THIS ISSUE CAN BE

ALLOTTED ONLY IN DEMATERIALIZED FORM AND TO (A) THE SAME DEPOSITORY

ACCOUNT/ CORRESPONDING PAN IN WHICH THE EQUITY SHARES ARE HELD BY SUCH

INVESTOR ON THE RECORD DATE, OR (B) THE DEPOSITORY ACCOUNT, DETAILS OF WHICH

HAVE BEEN PROVIDED TO OUR COMPANY OR THE REGISTRAR AT LEAST TWO WORKING

DAYS PRIOR TO THE ISSUE CLOSING DATE BY THE ELIGIBLE EQUITY SHAREHOLDER

HOLDING EQUITY SHARES IN PHYSICAL FORM AS ON THE RECORD DATE, OR (C) DEMAT

SUSPENSE ACCOUNT PENDING RECEIPT OF DEMAT ACCOUNT DETAILS FOR RESIDENT

ELIGIBLE EQUITY SHAREHOLDERS HOLDING EQUITY SHARES IN PHYSICAL FORM/ WHERE

THE CREDIT OF THE RIGHTS ENTITLEMENTS RETURNED/REVERSED/FAILED.

Investors shall be Allotted the Equity Shares in dematerialized (electronic) form. Our Company has signed an

agreement dated December 16, 2005 with NSDL and an agreement dated December 5, 2005 with CDSL which

enables the Investors to hold and trade in the securities issued by our Company in a dematerialized form, instead

of holding the Equity Shares in the form of physical certificates.

INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES CAN BE TRADED ON THE STOCK

EXCHANGES ONLY IN DEMATERIALIZED FORM.

The procedure for availing the facility for Allotment of Equity Shares in this Issue in the dematerialised form is

as under:

1. Open a beneficiary account with any depository participant (care should be taken that the beneficiary

account should carry the name of the holder in the same manner as is registered in the records of our

Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the

holders in the same order as registered in the records of our Company). In case of Investors having various

folios in our Company with different joint holders, the Investors will have to open separate accounts for

such holdings. Those Investors who have already opened such beneficiary account(s) need not adhere to

this step.

2. It should be ensured that the depository account is in the name(s) of the Investors and the names are in the

same order as in the records of our Company or the Depositories.

3. The responsibility for correctness of information filled in the Application Form vis-a-vis such information

with the Investor’s depository participant, would rest with the Investor. Investors should ensure that the

names of the Investors and the order in which they appear in Application Form should be the same as

registered with the Investor’s depository participant.

4. If incomplete or incorrect beneficiary account details are given in the Application Form, the Investor will

not get any Equity Shares and the Application Form will be rejected.

5. The Equity Shares will be allotted to Applicants only in dematerialized form and would be directly credited

to the beneficiary account as given in the Application Form after verification or demat suspense account

(pending receipt of demat account details for resident Eligible Equity Shareholders holding Equity Shares

in physical form/ with IEPF authority/ in suspense, etc.). Allotment advice, refund order (if any) would be

sent directly to the Applicant by email and, if the printing is feasible, through physical dispatch, by the

370

Registrar but the Applicant’s depository participant will provide to him the confirmation of the credit of

such Equity Shares to the Applicant’s depository account.

6. Non-transferable Allotment advice/ refund intimation will be directly sent to the Investors by the Registrar,

by email and, if the printing is feasible, through physical dispatch.

7. Renouncees will also have to provide the necessary details about their beneficiary account for Allotment

of Equity Shares in this Issue. In case these details are incomplete or incorrect, the Application is liable to

be rejected.

Resident Eligible Equity Shareholders, who hold Equity Shares in physical form and who have not

furnished the details of their demat account to the Registrar or our Company at least two Working Days

prior to the Issue Closing Date, desirous of subscribing to Equity Shares in this Issue must check the

procedure for application by and credit of Equity Shares to such Eligible Equity Shareholders in “-

Procedure for Application by Eligible Equity Shareholders holding Equity Shares in physical form” and “-

Credit and Transfer of Equity Shares in case of Shareholders holding Equity Shares in Physical Form” on


Procedure for Applications by FPIs

In terms of applicable FEMA Rules and the SEBI FPI Regulations, investments by FPIs in the Equity Shares is

subject to certain limits, i.e., the individual holding of an FPI (including its investor group (which means multiple

entities registered as foreign portfolio investors and directly and indirectly having common ownership of more

than 50% of common control)) shall be below 10% of our post-Issue Equity Share capital. In case the total holding

of an FPI or investor group increases beyond 10% of the total paid-up Equity Share capital of our Company, on a

fully diluted basis or 10% or more of the paid-up value of any series of debentures or preference shares or share

warrants that may be issued by our Company, the total investment made by the FPI or investor group will be re-

classified as FDI subject to the conditions as specified by SEBI and RBI in this regard and our Company and the

investor will also be required to comply with applicable reporting requirements. Further, the aggregate limit of all

FPIs investments, with effect from April 1, 2020, is up to the sectoral cap applicable to the sector in which our

Company operates.

FPIs are permitted to participate in this Issue subject to compliance with conditions and restrictions which may

be specified by the Government from time to time. The FPIs who wish to participate in the Offer are advised to

use the Application Form for non-residents. Subject to compliance with all applicable Indian laws, rules,

regulations, guidelines and approvals in terms of Regulation 21 of the SEBI FPI Regulations, an FPI may issue,

subscribe to or otherwise deal in offshore derivative instruments (as defined under the SEBI FPI Regulations as

any instrument, by whatever name called, which is issued overseas by an FPI against securities held by it that are

listed or proposed to be listed on any recognised stock exchange in India, as its underlying) directly or indirectly,

only in the event (i) such offshore derivative instruments are issued only to persons registered as Category I FPI

under the SEBI FPI Regulations; (ii) such offshore derivative instruments are issued only to persons who are

eligible for registration as Category I FPIs (where an entity has an investment manager who is from the Financial

Action Task Force member country, the investment manager shall not be required to be registered as a Category

I FPI); (iii) such offshore derivative instruments are issued after compliance with ‘know your client’ norms; and

(iii) compliance with other conditions as may be prescribed by SEBI.

An FPI issuing offshore derivative instruments is also required to ensure that any transfer of offshore derivative

instruments issued by or on its behalf, is carried out subject to inter alia the following conditions:

(a) such offshore derivative instruments are transferred only to persons in accordance with the SEBI FPI

Regulations; and

(b) prior consent of the FPI is obtained for such transfer, except when the persons to whom the offshore

derivative instruments are to be transferred to are pre – approved by the FPI.

371

Procedure for Applications by AIFs, FVCIs and VCFs

The SEBI VCF Regulations and the SEBI FVCI Regulations prescribe, among other things, the investment

restrictions on VCFs and FVCIs registered with SEBI. Further, the SEBI AIF Regulations prescribe, among other

things, the investment restrictions on AIFs.

As per the SEBI VCF Regulations and SEBI FVCI Regulations, VCFs and FVCIs are not permitted to invest in

listed companies pursuant to rights issues. Accordingly, applications by VCFs or FVCIs will not be accepted in

this Issue. Venture capital funds registered as Category I AIFs, as defined in the SEBI AIF Regulations, are not

permitted to invest in listed companies pursuant to rights issues. Accordingly, applications by venture capital

funds registered as category I AIFs, as defined in the SEBI AIF Regulations, will not be accepted in this Issue.

Other categories of AIFs are permitted to apply in this Issue subject to compliance with the SEBI AIF Regulations.

Such AIFs having bank accounts with SCSBs that are providing ASBA in cities / centres where such AIFs are

located are mandatorily required to make use of the ASBA facility or using R-WAP (available only for residents).

Otherwise, applications of such AIFs are liable for rejection.

Procedure for Applications by NRIs

Investments by NRIs are governed by the FEMA Rules. Applications will not be accepted from NRIs that are

ineligible to participate in this Issue under applicable securities laws.

As per the FEMA Rules, an NRI or Overseas Citizen of India (“OCI”) may purchase or sell capital instruments

of a listed Indian company on repatriation basis, on a recognised stock exchange in India, subject to the conditions,

inter alia, that the total holding by any individual NRI or OCI will not exceed 5% of the total paid-up equity

capital on a fully diluted basis or should not exceed 5% of the paid-up value of each series of debentures or

preference shares or share warrants issued by an Indian company and the total holdings of all NRIs and OCIs put

together will not exceed 10% of the total paid-up equity capital on a fully diluted basis or shall not exceed 10%

of the paid-up value of each series of debentures or preference shares or share warrants. The aggregate ceiling of

10% may be raised to 24%, if a special resolution to that effect is passed by the general body of the Indian

company. Our Company has not increased this ceiling of 10%.

Procedure for Applications by Mutual Funds

A separate application can be made in respect of each scheme of an Indian mutual fund registered with SEBI and

such applications shall not be treated as multiple applications. The applications made by asset management

companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the

application is being made.

Procedure for Applications by Systemically Important Non-Banking Financial Companies (“NBFC-SI”)

In case of an application made by NBFC-SI registered with RBI, (a) the certificate of registration issued by RBI

under Section 45IA of RBI Act, 1934 and (b) net worth certificate from its statutory auditors or any independent

chartered accountant based on the last audited financial statements is required to be attached to the application.

Impersonation

As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of Section

38 of the Companies Act, 2013 which is reproduced below:

“Any person who makes or abets making of an application in a fictitious name to a company for acquiring, or

subscribing for, its securities; or makes or abets making of multiple applications to a company in different

names or in different combinations of his name or surname for acquiring or subscribing for its securities; or

otherwise induces directly or indirectly a company to allot, or register any transfer of, securities to him, or to

any other person in a fictitious name, shall be liable for action under Section 447.”

The liability prescribed under Section 447 of the Companies Act for fraud involving an amount of at least ₹ 1

million or 1% of the turnover of the company, whichever is lower, includes imprisonment for a term of not less

than six months extending up to 10 years (provided that where the fraud involves public interest, such term shall

not be less than three years) and fine of an amount not less than the amount involved in the fraud, extending up to

three times of such amount. In case the fraud involves (i) an amount which is less than ₹ 1 million or 1% of the

372

turnover of the company, whichever is lower; and (ii) does not involve public interest, then such fraud is

punishable with an imprisonment for a term extending up to five years or a fine of an amount extending up to ₹ 5

million or with both.

Payment by stockinvest

In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated November 5, 2003, the stockinvest

scheme has been withdrawn. Hence, payment through stockinvest would not be accepted in this Issue.

Disposal of Application and Application Money

No acknowledgment will be issued for the Application Money received by our Company. However, the

Designated Branches of the SCSBs receiving the Application Form will acknowledge its receipt by stamping and

returning the acknowledgment slip at the bottom of each Application Form and the R-WAP platform would

generate an electronic acknowledgment to the Eligible Equity Shareholders upon submission of the Application.

Our Board reserves its full, unqualified and absolute right to accept or reject any Application, in whole or in part,

and in either case without assigning any reason thereto.

In case an Application is rejected in full, the whole of the Application Money will be unblocked in the respective

ASBA Accounts, in case of Applications through ASBA or refunded to the Investors in the same bank account

through which Application Money was received, in case of an application using the R-WAP facility. Wherever

an Application is rejected in part, the balance of Application Money, if any, after adjusting any money due on

Equity Shares Allotted, will be refunded / unblocked in the respective bank accounts from which Application

Money was received / ASBA Accounts of the Investor within a period of 15 days from the Issue Closing Date. In

case of failure to do so, our Company shall pay interest at such rate and within such time as specified under

applicable law.

For further instructions, please read the Application Form carefully.

Utilisation of Issue Proceeds

Our Board declares that:

A. All monies received out of this Issue shall be transferred to a separate bank account;

B. Details of all monies utilized out of this Issue referred to under (A) above shall be disclosed, and continue

to be disclosed till the time any part of the Issue Proceeds remains unutilised, under an appropriate separate

head in the balance sheet of our Company indicating the purpose for which such monies have been utilised;

and

C. Details of all unutilized monies out of this Issue referred to under (A) above, if any, shall be disclosed under

an appropriate separate head in the balance sheet of our Company indicating the form in which such

unutilized monies have been invested.

Undertakings by our Company

Our Company undertakes the following:

1) The complaints received in respect of this Issue shall be attended to by our Company expeditiously and

satisfactorily.

2) All steps for completion of the necessary formalities for listing and commencement of trading at all Stock

Exchanges where the Equity Shares are to be listed will be taken by our Board within seven Working Days

of finalization of Basis of Allotment.

3) The funds required for making refunds / unblocking to unsuccessful Applicants as per the mode(s) disclosed

shall be made available to the Registrar by our Company.

373

4) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the

Investor within 15 days of the Issue Closing Date, giving details of the banks where refunds shall be

credited along with amount and expected date of electronic credit of refund.

5) In case of refund / unblocking of the Application Money for unsuccessful Applicants or part of the

Application Money in case of proportionate Allotment, a suitable communication shall be sent to the

Applicants.

6) Adequate arrangements shall be made to collect all ASBA Applications and record all Applications made

under the R-WAP process.

7) Our Company shall comply with such disclosure and accounting norms specified by SEBI from time to

time.

Minimum Subscription

Pursuant to the SEBI Circular dated April 21, 2020, bearing reference no. SEBI/HO/CFD/CIR/CFD/DIL/ 67/2020

granting relaxations from certain provisions of the SEBI ICDR Regulations, if our Company does not receive the

minimum subscription of 75% of the Issue Size, our Company shall refund the entire subscription amount received

within 15 days from the Issue Closing Date. However, if our Company receives subscription between 75% to

90%, of the Issue Size, at least 75% of the Issue Size shall be utilized for the objects of this Issue other than general

corporate purpose. In the event that there is a delay in making refund of the subscription amount by more than

eight days after our Company becomes liable to pay subscription amount (i.e., 15 days after the Issue Closing

Date), or such other period as prescribed by applicable law, our Company shall pay interest for the delayed period,

at rates prescribed under applicable law.

Further, our Promoter has confirmed that it will subscribe to all of the unsubscribed portion in this Issue, subject

to the aggregate shareholding of our Promoter and Promoter Group being compliant with the minimum public

shareholding requirements under the SCRR and the SEBI Listing Regulations.

Important

1. Please read this Letter of Offer carefully before taking any action. The instructions contained in the

Application Form, Abridged Letter of Offer and the Rights Entitlement Letter are an integral part of the

conditions of this Letter of Offer and must be carefully followed; otherwise the Application is liable to be

rejected.

2. All enquiries in connection with this Letter of Offer, the Abridged Letter of Offer, the Rights Entitlement

Letter or Application Form must be addressed (quoting the Registered Folio Number or the DP ID and

Client ID number, the Application Form number and the name of the first Eligible Equity Shareholder as

mentioned on the Application Form and super scribed “Mahindra & Mahindra Financial Services

Limited – Rights Issue” on the envelope and postmarked in India or in the email) to the Registrar at the

following address:



Selenium, Tower B

Plot No 31 and 32, Financial District



Telangana, India

Telephone: +91 (40) 67162222

Toll free numbers: 18004258998/18003454001

Fax: +91 (40) 2343 1551

Email: [email protected]

Investor Grievance E mail: [email protected]

Contact Person: M Murali Krishna





https://secure-web.cisco.com/1xoiK3QywkWVG4tioqMCqpHby7ZFF7PvaLAAx8HqTR392Rg3_x1u70EGPwU9Ws6ys5_7xaL0jRzAQNmIFrPM2G1X2466v428PmZBFKokKHuwaNC1c_fef0pGha7ZfTRBWgZnLZcYjhR0TPV1hfVEgogFyhmtHwaf5lxt82r_wgKX5_LwsQTIqh38TsO3TGNNPMiPjvOV143Bjog5-ndGnd9jFtu8W7YEnwr-j6k-4wkIjjivmBuI99R1Wtd3RkkXDOkD5V5kmIGsKJQoTdaIvz7Gyzlygx6_zoS9cXErwipxq9v3ycwqOxG3tF1YENqgE3FwdJ207mQP_wKmeeujfIzTQTz28t-dPCHW6XHDQcBE/https%3A%2F%2Find01.safelinks.protection.outlook.com%2F%3Furl%3Dhttp%253A%252F%252Fwww.kfintech.com%252F%26data%3D01%257C01%257Clakshminarayanan.k%2540kfintech.com%257C308856b4ffcc4e51d80a08d7edd5b2b0%257C1f05907ac524467eb2e103a361253cb5%257C0%26sdata%3D9okrEUcSjD8QzcNCQ43zIfJWwgdNykwsxlQFD%252FFQp0A%253D%26reserved%3D0

374

3. In accordance with the SEBI Rights Issue Circulars, frequently asked questions and online/ electronic

dedicated investor helpdesk for guidance on the Application process and resolution of difficulties faced by

the Investors will be available on the website of the Registrar (https://rights.kfintech.com/mahindra).

Further, helpline numbers provided by the Registrar for guidance on the Application process and resolution

of difficulties are 18004258998/ 18003454001.

This Issue will remain open for a minimum 15 days. However, our Board will have the right to extend the Issue

Period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date (inclusive

of the Issue Opening Date).


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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

Foreign investment in Indian securities is regulated through the Industrial Policy, 1991, of the Government of

India and FEMA. While the Industrial Policy, 1991, of the Government of India, prescribes the limits and the

conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA

regulates the precise manner in which such investment may be made. The Union Cabinet, as provided in the

Cabinet Press Release dated May 24, 2017, has given its approval for phasing out the FIPB. Under the Industrial

Policy, 1991, unless specifically restricted, foreign investment is freely permitted in all sectors of the Indian

economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain

prescribed procedures for making such investment. Accordingly, the process for foreign direct investment (“FDI”)

and approval from the Government of India will now be handled by the concerned ministries or departments, in

consultation with the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and

Industry, Government of India (formerly known as the Department of Industrial Policy and Promotion)

(“DPIIT”), Ministry of Finance, Department of Economic Affairs, FIPB section, through a memorandum dated

June 5, 2017, has notified the specific ministries handling relevant sectors.

The Government has, from time to time, made policy pronouncements on FDI through press notes and press

releases. The DPIIT issued the Consolidated FDI Policy Circular of 2017 (“FDI Circular 2017”), which, with

effect from August 28, 2017, consolidated and superseded all previous press notes, press releases and clarifications

on FDI issued by the DPIIT that were in force and effect as on August 28, 2017. The Government proposes to

update the consolidated circular on FDI policy once every year and therefore, FDI Circular 2017 will be valid

until the DPIIT issues an updated circular.

The Government of India has from time to time made policy pronouncements on FDI through press notes and

press releases which are notified by RBI as amendments to FEMA. In case of any conflict between FEMA and

such policy pronouncements, FEMA prevails. The Consolidated FDI Policy, issued by the DPIIT, consolidates

the policy framework in place as on August 27, 2017, and supersedes all previous press notes, press releases and

clarifications on FDI issued by the DPIIT that were in force and effect as on August 27, 2017. The Government

proposes to update the consolidated circular on FDI Policy once every year and therefore the Consolidated FDI

Policy will be valid until the DPIIT issues an updated circular.

The transfer of shares between an Indian resident and a non-resident does not require the prior approval of RBI,

provided that (i) the activities of the investee company falls under the automatic route as provided in the FDI

Policy and FEMA and transfer does not attract the provisions of the SEBI Takeover Regulations; (ii) the non-

resident shareholding is within the sectoral limits under the FDI Policy; and (iii) the pricing is in accordance with

the guidelines prescribed by SEBI and RBI.

Please also note that pursuant to Circular No. 14 dated September 16, 2003 issued by RBI, Overseas Corporate

Bodies (“OCBs”) have been derecognized as an eligible class of investors and RBI has subsequently issued the

Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs))

Regulations, 2003. Any Investor being an OCB is required not to be under the adverse notice of RBI and to obtain

prior approval from RBI for applying in this Issue.

The above information is given for the benefit of the Applicants / Investors. Our Company and the Lead Managers

are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur

after the date of this Letter of Offer. Investors are advised to make their independent investigations and ensure

that the number of Equity Shares applied for do not exceed the applicable limits under laws or regulations.

376

RESTRICTIONS ON PURCHASES AND RESALES

General Eligibility and Restrictions

No action has been taken or will be taken to permit a public offering of the Rights Entitlements or the Equity

Shares to occur in any jurisdiction, or the possession, circulation, or distribution of this Letter of Offer, its

accompanying documents or any other material relating to our Company, the Rights Entitlements or the Equity

Shares in any jurisdiction where action for such purpose is required, except that this Letter of Offer will be filed

with SEBI and the Stock Exchanges.

The Rights Entitlements and Equity Shares have not been and will not be registered under the US Securities Act

and may not be offered or sold within the United States (other than to persons in the United States who are U.S.

QIBs).

The Rights Entitlements or the Equity Shares may not be offered or sold, directly or indirectly, and none of this

Letter of Offer, its accompanying documents or any offering materials or advertisements in connection with the

Rights Entitlements or the Equity Shares may be distributed or published in or from any country or jurisdiction

except in accordance with the legal requirements applicable in such jurisdiction.

Investors are advised to consult their legal counsel prior to accepting any provisional allotment of Equity Shares,

applying for excess Equity Shares or making any offer, sale, resale, pledge or other transfer of the Rights

Entitlements or the Equity Shares.

This Letter of Offer and its accompanying documents will be supplied to you solely for your information and may

not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or

in part, for any purpose.

Each person who exercises the Rights Entitlements and subscribes for the Equity Shares, or who purchases the

Rights Entitlements or the Equity Shares shall do so in accordance with the restrictions set out below.

United States

The Rights Entitlements and the Equity Shares have not been, and will not be, registered under the US Securities

Act or under any securities laws of any state or other jurisdiction of the United States and may not be offered,

sold, resold, allotted, taken up, exercised, renounced, pledged, transferred or delivered, directly or indirectly

within the United States except pursuant to an applicable exemption from, or a transaction not subject to, the

registration requirements of the US Securities Act and in compliance with any applicable securities laws of any

state or other jurisdiction of the United States. The Rights Entitlements and Equity Shares referred to in this Letter

of Offer are being offered in offshore transactions outside the United States in compliance with Regulation S under

the US Securities Act and in the United States to “qualified institutional buyers” (as defined in Rule 144A under

the US Securities Act) pursuant to Section 4(a)(2) under the US Securities Act. Neither receipt of this Letter of

Offer, nor any of its accompanying documents constitutes an offer of the Rights Entitlements or the Equity Shares

to any Eligible Equity Shareholder other than the Eligible Equity Shareholder who has received this Letter of

Offer and its accompanying documents directly from our Company or the Registrar.

For Investors in the United States

The Rights Entitlements and the Equity Shares may only be acquired by persons in the United States who are U.S.

QIBs pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US

Securities Act. If you are in the United States, you may not exercise any Rights Entitlements and/or acquire any

Equity Shares offered hereby unless you are a U.S. QIB and have been invited to participate directly by our

Company.

All offers and sales in the United States of the Rights Entitlements and the Equity Shares have been, or will be,

made solely by our Company. The Lead Managers are not making, will not make, and will not participate or

otherwise be involved in any offers or sales of the Rights Entitlements, the Equity Shares or any other security

with respect to this Issue in the United States.

Each person in the United States by accepting the delivery of this Letter of Offer and its accompanying documents,

submitting an Application Form for the exercise of any Rights Entitlements and subscription for any Equity Shares

377

and accepting delivery of any Rights Entitlements or any Equity Shares, will be deemed to have represented,

warranted and agreed as follows on behalf of itself and, if it is acquiring the Rights Entitlements or the Equity

Shares as a fiduciary or agent for one or more investor accounts, on behalf of each owner of such account (such

person being the “purchaser”, which term shall include the owners of the investor accounts on whose behalf the

person acts as fiduciary or agent):

1. The purchaser has the full power and authority to make the acknowledgements, representations, warranties

and agreements contained herein and to exercise the Rights Entitlements and subscribe for the Equity

Shares, and, if the purchaser is exercising the Rights Entitlements and acquiring the Equity Shares as a

fiduciary or agent for one or more investor accounts, the purchaser has the full power and authority to make

the acknowledgements, representations, warranties and agreements contained herein and to exercise the

Rights Entitlements and subscribe for the Equity Shares on behalf of each owner of such account.

2. The purchaser is aware and understands (and each account for which it is acting has been advised and

understands) that an investment in the Rights Entitlements and the Equity Shares involves a considerable

degree of risk and that the Rights Entitlements and the Equity Shares are a speculative investment, and

further, that no U.S. federal or state or other agency has made any finding or determination as to the fairness

of any such investment or any recommendation or endorsement of any such investment.

3. The purchaser understands (and each account for which it is acting has been advised and understands) that

no action has been or will be taken to permit an offering of the Rights Entitlements or the Equity Shares in

any jurisdiction (other than the filing of this Letter of Offer with SEBI and the Stock Exchanges); and it

will not offer, resell, pledge or otherwise transfer any of the Rights Entitlements or the Equity Shares which

it may acquire, or any beneficial interests therein, in any jurisdiction or in any circumstances in which such

offer or sale is not authorised or to any person to whom it is unlawful to make such offer, sale, solicitation

or invitation except under circumstances that will result in compliance with any applicable laws and/or

regulations. The purchaser agrees to notify any transferee to whom it subsequently reoffers, resells, pledges

or otherwise transfers the Rights Entitlements and the Equity Shares of the restrictions set forth in the Letter

of Offer under the heading “Restrictions on Purchases and Resales”.

4. Without limiting the generality of the foregoing, the purchaser is aware and understands (and each account

for which it is acting has been advised and understands) that (i) the Rights Entitlements and the Equity

Shares have not been and will not be registered under the US Securities Act or under any securities laws of

any state or other jurisdiction of the United States; (ii) any offer and sale of the Rights Entitlements or the

Equity Shares in the United States is being made pursuant to the private placement exemption set out in

Section 4(a)(2) under the US Securities Act; and (iii) the Rights Entitlements and the Equity Shares are

“restricted securities” within the meaning of Rule 144(a)(3) under the US Securities Act; and it agrees, on

its own behalf and on behalf of any accounts for which it is acting, that for so long as the Rights Entitlements

or the Equity Shares are “restricted securities”, it will not reoffer, resell, pledge or otherwise transfer any

Rights Entitlements or the Equity Shares which it may acquire, or any beneficial interest therein, except in

an offshore transaction complying with Rule 904 of Regulation S.

5. The purchaser (or any account for which it is acting) is an Eligible Equity Shareholder and has received an

invitation from our Company, addressed to it and inviting it to participate in this Issue.

6. The purchaser is a U.S. QIB, and if it is acquiring the Rights Entitlements or the Equity Shares as a fiduciary

or agent for one or more investor accounts, each owner of such account is a QIB. To the extent the purchaser

exercises the Rights Entitlements and subscribes for the Equity Shares, it will exercise such Rights

Entitlements and acquire such Equity Shares for its own account, or for the account of one or more U.S.

QIB(s) as to which the purchaser has full investment discretion, in each case for investment purposes, and

not with a view to any resale, distribution or other disposition (within the meaning of U.S. securities laws)

of the Rights Entitlements or the Equity Shares.

7. To the extent the purchaser exercises the Rights Entitlements and subscribes for the Equity Shares, it

acknowledges and agrees that it is not acquiring or subscribing for the Rights Entitlements or the Equity

Shares as a result of any general solicitation or general advertising (as those terms are defined in Regulation

D under the US Securities Act). The purchaser understands and agrees that although offers and sales of the

Rights Entitlements and the Equity Shares are being made in the United States to U.S. QIBs, such offers

and sales are being made pursuant to the private placement exemption set out in Section 4(a)(2) of the US

Securities Act.

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8. The purchaser understands and acknowledges that all offers and sales in the United States of the Rights

Entitlements and the Equity Shares have been, or will be, made solely by our Company. The Lead Managers

are not making, will not make, and will not participate or otherwise be involved in any offers or sales of

the Rights Entitlements, the Equity Shares or any other security with respect to this Issue in the United

States.

9. The purchaser understands that the Lead Managers have not performed diligence with respect to our

Company or this Issue that they would have performed if this Issue was being registered pursuant to the

US Securities Act.

10. Neither the purchaser nor any of its affiliates or any person acting on its or their behalf has taken or will

take, directly or indirectly, any action designed to, or which might be expected to, cause or result in the

stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of

the Rights Entitlements or the Equity Shares pursuant to the Issue.

11. To the extent the purchaser exercises the Rights Entitlements and subscribes for the Equity Shares, it agrees

not to deposit any Equity Shares into any unrestricted depository facility maintained by any depository

bank unless and until such time as the Rights Entitlements or the Equity Shares are no longer “restricted

securities” within the meaning of Rule 144(a)(3) under the US Securities Act.

12. Prior to making any investment decision to exercise the Rights Entitlements and subscribe for the Equity

Shares, the purchaser (i) will have consulted with its own legal, regulatory, tax, business, investment,

financial and accounting advisers in each jurisdiction in connection herewith to the extent it has deemed

necessary; (ii) will have carefully read and reviewed a copy of this Letter of Offer and its accompanying

documents; (iii) will have possessed and carefully read and reviewed all information relating to our

Company and our group and the Rights Entitlements and the Equity Shares which it believes is necessary

or appropriate for the purpose of making its investment decision, including, without limitation, the

Exchange Information (as defined below), and will have had a reasonable opportunity to ask questions of

and receive answers from officers and representatives of our Company concerning the financial condition

and results of operations of our Company and the purchase of the Rights Entitlements or the Equity Shares,

and any such questions have been answered to its satisfaction; (iv) will have possessed and reviewed all

information that it believes is necessary or appropriate in connection with an investment in the Rights

Entitlements and the Equity Shares; (v) will have conducted its own due diligence on our Company and

this Issue, and will have made its own investment decisions based upon its own judgement, due diligence

and advice from such advisers as it has deemed necessary and will not have relied upon any

recommendation, promise, representation or warranty of or view expressed by or on behalf of our Company,

the Lead Managers or its affiliates (including any research reports) (other than, with respect to our Company

and any information contained in this Letter of Offer); and (vi) will have made its own determination that

any investment decision to exercise the Rights Entitlements and subscribe for the Equity Shares is suitable

and appropriate, both in the nature and number of Equity Shares being subscribed.

13. Without limiting the generality of the foregoing, the purchaser acknowledges that (i) the Equity Shares are

listed on BSE Limited and the National Stock Exchange of India Limited and our Company is therefore

required to publish certain business, financial and other information in accordance with the rules and

practices of BSE Limited and the National Stock Exchange of India Limited (which includes, but is not

limited to, a description of the nature of our Company’s business and our Company’s most recent balance

sheet and profit and loss account, and similar statements for preceding years together with the information

on its website and its press releases, announcements, investor education presentations, annual reports,

collectively constitutes “Exchange Information”), and that it has had access to such information without

undue difficulty and has reviewed such Exchange Information as it has deemed necessary; (ii) our Company

does not expect or intend to become subject to the periodic reporting and other information requirements

of the Securities and Exchange Commission; and (iii) neither our Company nor any of its affiliates, nor the

Lead Managers or any of their affiliates has made any representations or recommendations to it, express or

implied, with respect to our Company, the Rights Entitlements or the Equity Shares or the accuracy,

completeness or adequacy of the Exchange Information.

14. The purchaser understands that the Exchange Information and this Letter of Offer have been prepared in

accordance with content, format and style which is either prescribed by SEBI, the Stock Exchanges or

under Indian laws, which differs from the content, format and style customary for similar offerings in the

United States. In particular, the purchaser understands that (i) our Company’s financial information

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contained in the Exchange Information and this Letter of Offer have been prepared in accordance with Ind

AS, Companies Act, and other applicable statutory and/or regulatory requirements and not in a manner

suitable for an offering registered with the US SEC, and (ii) this Letter of Offer does not include all of the

information that would be required if our Company were registering the Issue of the Rights Entitlements

and the Equity Shares with the US SEC, such as a description of our business and industry, detailed

operational data, our management’s discussion and analysis of our financial condition and results of

operations and audited financial statements for prior years.

15. The purchaser acknowledges that (i) any information that it has received or will receive relating to or in

connection with this Issue, and the Rights Entitlements or the Equity Shares, including this Letter of Offer

and the Exchange Information (collectively, the “Information”), has been prepared solely by our

Company; and (ii) none of the Lead Managers or any of its affiliates has verified such Information, and no

recommendation, promise, representation or warranty (express or implied) is or has been made or given by

the Lead Managers or its affiliates as to the accuracy, completeness or sufficiency of the Information, and

nothing contained in the Information is, or shall be relied upon as, a promise, representation or warranty by

any of them or their affiliates.

16. The purchaser will not hold our Company, the Lead Managers or its affiliates responsible for any

misstatements in or omissions to the Information or in any other written or oral information provided by

our Company to it. It acknowledges that no written or oral information relating to this Issue, and the Rights

Entitlements or the Equity Shares has been or will be provided by the Lead Managers or its affiliates to it.

17. The purchaser is a highly sophisticated investor and has such knowledge and experience in financial,

business and international investment matters and is capable of independently evaluating the merits and

risks (including for tax, legal, regulatory, accounting and other financial purposes) of an investment in the

Rights Entitlements and the Equity Shares. It, or any account for which it is acting, has the financial ability

to bear the economic risk of investment in the Rights Entitlements and the Equity Shares, has adequate

means of providing for its current and contingent needs, has no need for liquidity with respect to any

investment it (or such account for which it is acting) may make in the Rights Entitlements and the Equity

Shares, and is able to sustain a complete loss in connection therewith and it will not look to our Company,

or to the Lead Managers, for all or part of any such loss or losses it may suffer.

18. The purchaser understands and acknowledges that the Lead Managers are assisting our Company in respect

of this Issue and that the Lead Managers are acting solely for our Company and no one else in connection

with this Issue and, in particular, are not providing any service to it, making any recommendations to it,

advising it regarding the suitability of any transactions it may enter into to subscribe or purchase any Rights

Entitlements or Equity Shares nor providing advice to it in relation to our Company, this Issue or the Rights

Entitlements or the Equity Shares. Further, to the extent permitted by law, it waives any and all claims,

actions, liabilities, damages or demands it may have against the Lead Manager arising from its engagement

with our Company and in connection with this Issue.

19. The purchaser understands that our Company cannot determine with certainty, and has not determined,

whether our Company may be treated as a “passive foreign investment company” (a “PFIC”) for U.S.

federal income tax purposes for the current taxable year, and may not be able to make such a determination

in future years and, in the event our Company is treated as a PFIC, will not provide information required

for it to make a “qualified electing fund” election, and that there may be certain adverse consequences

under United States tax laws if our Company were to be a PFIC in the current or any future taxable year in

which it may hold Equity Shares. In addition, in the event our Company is treated as a PFIC, it will be

subject to certain U.S. Internal Revenue Service information reporting obligations. It understands that a

separate determination must be made each year as to our Company’s PFIC status. The purchaser

acknowledges and confirms that it has made and relied entirely upon its own assessment as to whether, and

the consequences to it if, the Company has been, is, continues to be, may be, or becomes a PFIC for United

States federal income tax purposes.

20. The purchaser’s exercise of the Rights Entitlements and subscription for the Equity Shares and

consummation of the transactions contemplated by this Letter of Offer, does not and will not constitute or

result in a prohibited transaction under the U.S. Employee Retirement Income Securities Act of 1974 or

Section 4975 of the U.S. Internal Revenue Code of 1986 for which an exemption is not available;

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21. The purchaser understands that its receipt of the Rights Entitlements and any subscription it may make for

the Equity Shares will be subject to and based upon all the terms, conditions, representations, warranties,

acknowledgements, agreements and undertakings and other information contained in this Letter of Offer

and the Application Form. The purchaser understands that neither our Company, nor the Registrar, the Lead

Managers or any other person acting on behalf of us will accept subscriptions from any person, or the agent

of any person, who appears to be, or who we, the Registrar, the Lead Managers or any other person acting

on behalf of us have reason to believe is in the United States (other than U.S. QIBs), or if such person is

outside of India and the United States, such person is not a foreign corporate or institutional shareholder,

or is ineligible to participate in this Issue under applicable securities laws.

22. The purchaser understands that the foregoing representations and acknowledgments have been provided in

connection with United States, India and other securities laws. It acknowledges that our Company and the

Lead Managers, its affiliates and others (including legal counsels to each of our Company and the Lead

Managers) will rely upon the truth and accuracy of the foregoing acknowledgements, representations,

warranties and agreements and agree that, if at any time before the closing of this Issue or the issuance of

the Equity Shares, any of the acknowledgements, representations, warranties and agreements made in

connection with its exercise of Rights Entitlements and subscription for the Equity Shares is no longer

accurate, it shall promptly notify our Company in writing.

Any person in the United States who obtains a copy of this Letter of Offer, or its accompanying documents and

who has not been specifically invited by our Company to participate or who is not a U.S. QIB is required to

disregard it.

For Investors Outside of the United States

The Rights Entitlements and the Equity Shares offered outside the United States are being offered in offshore

transactions in reliance on Regulation S.

Each person outside of the United States by accepting the delivery of this Letter of Offer and its accompanying

documents, submitting an Application Form for the exercise of any Rights Entitlements and subscription for any

Equity Shares and accepting delivery of any Rights Entitlements or any Equity Shares, will be deemed to have

represented, warranted and agreed as follows on behalf of itself and, if it is acquiring the Rights Entitlements or

the Equity Shares as a fiduciary or agent for one or more investor accounts, on behalf of each owner of such

account (such person being the “purchaser”, which term shall include the owners of the investor accounts on

whose behalf the person acts as fiduciary or agent):

(a) Each of the representations, warranties and agreements in numbered paragraphs 1 through 5 (inclusive),

paragraphs 10 through 18 (inclusive) and paragraphs 21 and 22 under the heading “Restrictions on

Purchases and Resales – United States – For Investors in the United States”.

(b) The purchaser (i) is aware that the Rights Entitlements and the Equity Shares have not been and will not be

registered under the US Securities Act and are being distributed and offered outside the United States in

reliance on Regulation S, (ii) is, and the persons, if any, for whose account it is acquiring such Rights

Entitlements and/or the Equity Shares are, outside the United States and eligible to subscribe for Rights

Entitlements and Equity Shares in compliance with applicable securities laws, and (iii) is acquiring the

Rights Entitlements and/or the Equity Shares in an offshore transaction meeting the requirements of

Regulation S.

(c) No offer or sale of the Rights Entitlements or the Equity Shares to the purchaser is the result of any “directed

selling efforts” in the United States (as such term is defined in Regulation S under the Securities Act).

(d) The purchaser is, and the persons, if any, for whose account it is acquiring the Rights Entitlements and the

Equity Shares are, entitled to subscribe for the Equity Shares, and the sale of the Equity Shares to it will

not require any filing or registration by, or qualification of, our Company with any court or administrative,

governmental or regulatory agency or body, under the laws of any jurisdiction which apply to the purchaser

or such persons.

(e) The purchaser, and each account for which it is acting, satisfies (i) all suitability standards for investors in

investments in the Rights Entitlements and the Equity Shares imposed by the jurisdiction of its residence,

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and (ii) is eligible to subscribe and is subscribing for the Equity Shares and Rights Entitlements in

compliance with applicable securities and other laws of our jurisdiction of residence.

Australia

This Letter of Offer does not constitute a prospectus or other disclosure document under the Corporations Act

2001 (Cth) (“Australian Corporations Act”) and does not purport to include the information required of a

disclosure document under the Australian Corporations Act. This Letter of Offer has not been lodged with the

Australian Securities and Investments Commission (“ASIC”) and no steps have been taken to lodge it as such

with ASIC. Any offer in Australia of the Rights Entitlements and Equity Shares under this Letter of Offer may

only be made to persons who are “sophisticated investors” (within the meaning of section 708(8) of the Australian

Corporations Act), to “professional investors” (within the meaning of section 708(11) of the Australian

Corporations Act) or otherwise pursuant to one or more exemptions under section 708 of the Australian

Corporations Act so that it is lawful to offer the Rights Entitlements and Equity Shares in Australia without

disclosure to investors under Part 6D.2 of the Australian Corporations Act.

If you are acting on behalf of, or acting as agent or nominee for, an Australian resident and you are a recipient of

this Letter of Offer, and any offers made under this Letter of Offer, you represent to the Issuer and the Lead

Managers that you will not provide this Letter of Offer or communicate any offers made under this Letter of Offer

to, or make any applications or receive any offers for Rights Entitlements or the Equity Shares for, any Australian

residents unless they are a “sophisticated investor” or a “professional investor” as defined by section 708 of the

Australian Corporations Act.

Any offer of the Rights Entitlements or the Equity Shares for on-sale that is received in Australia within 12 months

after their issue by our Company, or within 12 months after their sale by a selling security holder (or the Lead

Managers) under the Issue, as applicable, is likely to need prospectus disclosure to investors under Part 6D.2 of

the Australian Corporations Act, unless such offer for on-sale in Australia is conducted in reliance on a prospectus

disclosure exemption under section 708 of the Australian Corporations Act or otherwise. Any persons acquiring

the Rights Entitlements and the Equity Shares should observe such Australian on-sale restrictions.

Belgium

The Issue does not constitute a public offer in Belgium. This Letter of Offer relating to the Issue has not been, and

will not be, notified to the Financial Services and Markets Authority in Belgium in accordance with the Belgian

Law of 11 July 2018 on public offerings of investment instruments and the admission of investment instruments

to trading on regulated markets (as amended or replaced from time to time, the “Prospectus Law”) and Regulation

(EU) 2017/1129 (the “Prospectus Regulation”). Accordingly, the Equity Shares and Rights Entitlements may

not be distributed, offered, sold or resold, transferred or delivered in Belgium except (i) to “qualified investors”

as referred to in article 2, (e) of the Prospectus Regulation, (ii) to fewer than 150 natural or legal persons who hold

shares in our Company (other than qualified investors as defined in the Prospectus Regulation) or (iii) in any other

circumstances in which the Issue does not qualify as an offer to the public in Belgium in accordance with the

Prospectus Regulation and the Prospectus Law.

Canada

The Equity Shares and the Rights Entitlements, this Letter of Offer and any other offering material may be offered

to and distributed to shareholders resident in Canada in accordance with the exemption from prospectus

requirements in National Instrument 45-106, section 2.1.2 “Rights Offering-Issuer With Minimal Connection to

Canada”.

Cayman Islands

No offer or invitation to subscribe for the Rights Entitlements and the Equity Shares may be made to the public

in the Cayman Islands.

China

This Letter of Offer may not be circulated or distributed in the People’s Republic of China (“PRC”) and the Rights

Entitlements and the Equity Shares may not be offered or sold, and will not be offered or sold to any person for

re-offering or resale directly or indirectly to, or for the benefit of, legal or natural persons of the PRC except

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pursuant to applicable laws and regulations of the PRC. Further, no legal or natural persons of the PRC may

directly or indirectly purchase any of the Rights Entitlements and the Equity Shares or any beneficial interest

therein without obtaining all prior PRC’s governmental approvals that are required, whether statutorily or

otherwise. Persons who come into possession of this Letter of Offer are required by the Issuer and its

representatives to observe these restrictions. For the purpose of this paragraph, PRC does not include Taiwan and

the special administrative regions of Hong Kong and Macau.

European Economic Area (EEA)

In relation to each member State of the European Economic Area (each, a “Relevant State”), no Rights

Entitlement or Equity Shares have been offered or will be offered pursuant to the Issue to the public in that

Relevant State prior to the publication of a prospectus in relation to the Rights Entitlement and the Equity Shares

which has been approved by the competent authority in that Relevant State or, where appropriate, approved in

another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the

Prospectus Regulation, except that offers of the Rights Entitlement and the Equity Shares may be made to the

public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

(1) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(2) to fewer than 150 natural or legal persons per Relevant State (other than qualified investors as defined under

the Prospectus Regulation), subject to obtaining the prior consent of the Lead Managers for any such offer;

or

(3) in any other circumstances falling within article 1(4) of the Prospectus Regulation,

provided that no such offer of the Rights Entitlements or the Equity Shares requires the Issuer to publish a

prospectus pursuant to article 3 of the Prospectus Regulation or supplement of a prospectus pursuant to article 23

of the Prospectus Regulation. This Letter of Offer is not a prospectus for the purposes of the Prospectus

Regulation.

For the purposes of this provision, the expression “offer to the public” in relation to any Rights Entitlement and

the Equity Shares in any Relevant State means the communication to persons in any form and by any means,

presenting sufficient information on the terms of the offer and the Rights Entitlement and the Equity Shares to be

offered so as to enable an investor to decide to purchase or subscribe for the Rights Entitlement and the Equity

Shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129, as amended from time to

time.

Hong Kong

The Rights Entitlements and the Equity Shares may not be offered or sold in Hong Kong by means of any

document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the

Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to

“professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong

Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a

“prospectus” within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.

32, Laws of Hong Kong) and no advertisement, invitation or document relating to the Rights Entitlements and the

Equity Shares may be issued or may be in the possession of any person for the purpose of issue (in each case

whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or

read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with

respect to the Rights Entitlements and the Equity Shares which are or are intended to be disposed of only to

persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures

Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Ireland

The Rights Entitlements and the Equity Shares have not been offered or sold, and will not be offered, sold,

underwritten, in Ireland other than in conformity with:

a. Regulation (EU) 2017/1129 (the Prospectus Regulation), the European Union (Prospectus) Regulations

2019 of Ireland and any rules issued by the Central Bank pursuant to section 1363 of the Companies Act

2014 of Ireland;

383

b. the provisions of the Irish Companies Act 2014;

c. the provisions of the Central Bank Acts 1942 to 2018 of Ireland (as amended) and any codes of conduct

rules made under Section 117(1) of the Central Bank Act 1989 (as amended) of Ireland;

d. the provisions of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. no. 375

of 2017) (as amended) and the provisions of the Investor Compensation Act 1998; and

e. the provisions of the Market Abuse Regulation (EU 596/2014), the Market Abuse Directive on Criminal

Sanctions for market abuse (Directive 2014/57/EU) (as amended), the European Union (Market Abuse)

Regulations 2016 of Ireland and any rules issued by the Central Bank of Ireland pursuant to section 1370

of the Companies Act 2014 of Ireland.

Italy

This Letter of Offer has not been submitted to the Italian Commissione Nazionale per le Societa e la Borsa

(“Consob”) for clearance and will not be subject to formal review, clearance or approval by Consob. The Rights

Entitlement and the Equity Shares may not be offered, sold or delivered, directly or indirectly in the Republic of

Italy or to a resident of the Republic of Italy, unless such offer, sale or delivery of the Rights Entitlement and the

Equity Shares or distribution of copies of this Letter of Offer takes place:

(i) pursuant to the Prospectus Regulation and Italian legislative decree no. 58 of February 24, 1998, as

amended from time to time (the “TUF”), made only to “qualified investors” (investitori qualificati), as

defined pursuant to article 34-ter, first paragraph, letter (b), of Consob Regulation no. 11971 of May 14,

1999 as amended from time to time ( “Consob Issuers Regulation”) by reference to article 35, paragraph

1, letter (d) of Consob Regulation no. 20307 of February 15, 2018, as amended from time to time

(“Consob Regulation no. 20307”); or

(ii) in any other circumstances which are exempt from the rules on public offers pursuant to the Prospectus

Regulation, article 100 of the TUF and its second-level Consob regulations, including Consob Issuers

Regulation.

Any such offer, sale or delivery of the Rights Entitlement and the Equity Shares or any distribution of copies of

this Letter of Offer in the Republic of Italy must comply with the selling restrictions under (i) and (ii) above and

be:

(1) made by authorized persons (soggetti abilitati) (including, without limitation, investment firms, banks or

financial intermediaries, as defined by article 1, first paragraph, letter (r), of the TUF), to the extent duly

authorized to engage in the placement and/or underwriting and/or purchase of financial instruments in the

Republic of Italy in accordance with the relevant provisions of the TUF, Consob Regulation no. 20307, Italian

legislative decree no. 385 of September 1, 1993, as amended, and any other applicable laws and regulations;

and

(2) in compliance with any other applicable Italian securities and tax and exchange laws and regulations as well

as in compliance with other applicable requirements or limitations which may be imposed by Consob or the

Bank of Italy or any other Italian regulatory authority from time to time.

Any investor purchasing the Rights Entitlement and the Equity Shares is solely responsible for ensuring that any

offer or resale of the rights it purchases occurs in compliance with applicable laws and regulations.

In accordance with article 100-bis of the TUF,

(A) the subsequent resale on the secondary market in the Republic of Italy of financial instruments, which were

part of an offer made pursuant to an exemption from the obligation to publish a prospectus; or

(B) the systematic resale to investors different from qualified investors of financial instruments which were

purchased by qualified investors in the previous twelve months in the context of a placement reserved to

qualified investors only,

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constitutes a distinct and autonomous offer that must be made in compliance with the public offer and prospectus

requirement rules provided under the Prospectus Regulation, the TUF and Consob Issuers Regulation, unless an

exemption applies.

Failure to comply with such rules may also result in the subsequent resale of such financial instruments being

declared null and void and in the liability of the intermediary transferring the financial instruments for any damage

suffered by the investors.

Japan

The Rights Entitlements and the Equity Shares have not been and will not be registered under the Financial

Instruments and Exchange Act of Japan (Law. No. 25 of 1948 as amended) (the “FIEA”) and disclosure under

the FIEA has not been and will not be made with respect to the Rights Entitlements and the Equity Shares. No

Rights Entitlements or Equity Shares have, directly or indirectly, been offered or sold, and may not, directly or

indirectly, be offered or sold in Japan or to, or for the benefit of, any resident of Japan as defined in the first

sentence of Article 6, Paragraph 1, Item 5 of the Foreign Exchange and Foreign Trade Contract Act of Japan (Law

No. 228 of 1949, as amended) (“Japanese Resident”) or to others for re-offering or re-sale, directly or indirectly

in Japan or to, or for the benefit of, any Japanese Resident except (i) pursuant to an exemption from the registration

requirements of the FIEA and (ii) in compliance with any other relevant laws, regulations and governmental

guidelines of Japan.

If an offeree does not fall under a “qualified institutional investor” (tekikaku kikan toshika), as defined in Article

10, Paragraph 1 of the Cabinet Office Ordinance Concerning Definition Provided in Article 2 of the Financial

Instruments and Exchange Act (Ordinance of the Ministry of Finance No. 14 of 1993, as amended) (the “Qualified

Institutional Investor”), the Rights Entitlements and Equity Shares will be offered in Japan by a private

placement to small number of investors (shoninzu muke kanyu), as provided under Article 23- 13, Paragraph 4 of

the FIEA, and accordingly, the filing of a securities registration statement for a public offering pursuant to Article

4, Paragraph 1 of the FIEA has not been made.

If an offeree falls under the Qualified Institutional Investor, the Rights Entitlements and the Equity Shares will be

offered in Japan by a private placement to the Qualified Institutional Investors (tekikaku kikan toshikamuke

kanyu), as provided under Article 23-13, Paragraph 1 of the FIEA, and accordingly, the filing of a securities

registration statement for a public offering pursuant to Article 4, Paragraph 1 of the FIEA has not been made. To

receive the Rights Entitlements and subscribe the Equity Shares (the “QII Rights Entitlements and the QII

Rights Equity Shares”) such offeree will be required to agree that it will be prohibited from selling, assigning,

pledging or otherwise transferring the QII Rights Entitlements and the QII Rights Equity Shares other than to

another Qualified Institutional Investor.

Kuwait

This Letter of Offer and does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy,

the Rights Entitlements or the Equity Shares in the State of Kuwait. The Rights Entitlements and the Equity Shares

have not been licensed for offering, promotion, marketing, advertisement or sale in the State of Kuwait by the

Capital Markets Authority or any other relevant Kuwaiti government agency. The offering, promotion, marketing,

advertisement or sale of the Rights Entitlements and the Equity Shares in State of Kuwait on the basis of a private

placement or public offering is, therefore, prohibited in accordance with Law No. 7 of 2010 and the Executive

Bylaws for Law No. 7 of 2010, as amended, which govern the issue, offer, marketing and sale of financial

services/products in the State of Kuwait. No private or public offering of the Rights Entitlements or the Equity

Shares is or will be made in the State of Kuwait, and no agreement relating to the sale of the Rights Entitlements

or the Equity Shares will be concluded in the State of Kuwait and no marketing or solicitation or inducement

activities are being used to offer or market the Rights Entitlements or the Equity Shares in the State of Kuwait.

Luxembourg

The Rights Entitlements and the Equity Shares offered in this Letter of Offer may not be offered, sold or delivered

to the public within the Grand Duchy of Luxembourg. This Letter of Offer is only intended for institutional

investors. It is personal to each offeree and does not constitute an offer to any other person or to the public

generally in Luxembourg to subscribe for or otherwise acquire the Rights Entitlements and the Equity Shares.

Distribution of this Letter of Offer to any person other than the offeree and those persons, if any, retained to advise

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such offeree with respect thereto is unauthorized and any disclosure of any of its contents, without prior written

consent of the Issuer, is prohibited.

Mauritius

The Rights Entitlements and the Equity Shares may not be offered or sold, directly or indirectly, to the public in

Mauritius. Neither this Letter of Offer nor any offering material or information contained herein relating to the

offer of the Rights Entitlements and the Equity Shares may be released or issued to the public in Mauritius or used

in connection with any such offer. This Letter of Offer does not constitute an offer to sell the Rights Entitlements

and the Equity Shares to the public in Mauritius and is not a prospectus as defined under the Companies Act 2001.

Norway

This Letter of Offer has not been approved by, or registered with, any Norwegian securities regulator under the

Norwegian Securities Trading Act of 29 June 2007. Accordingly, this Letter of Offer shall not be deemed to

constitute an offer to the public in Norway within the meaning of the Norwegian Securities Trading Act of 2007.

The Rights Entitlements and the Equity Shares may not be offered or sold, directly or indirectly, in Norway except

to professional clients (as defined in Norwegian Securities Regulation of 29 June 2007 no. 876 and including non-

professional clients having met the criteria for being deemed to be professional and for which an investment firm

has waived the protection as non-professional in accordance with the procedures in this regulation).

Singapore

Each Lead Manager has acknowledged that this Letter of Offer has not been registered as a prospectus with the

Monetary Authority of Singapore. Accordingly, each Lead Manager has represented and agreed that it has not

offered or sold any Rights Entitlement or Equity Shares or caused the Rights Entitlement and Equity Shares to be

made the subject of an invitation for subscription or purchase and will not offer or sell any Rights Entitlement or

Equity Shares or cause the Rights Entitlement or Equity Shares to be made the subject of an invitation for

subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Letter of Offer

or any other document or material in connection with the offer or sale, or invitation for subscription or purchase,

of the Rights Entitlement and the Equity Shares, whether directly or indirectly, to any person in Singapore other

than:

(a) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of

Singapore, as modified or amended from time to time (the “SFA”)) pursuant to Section 274 of the SFA;

(a) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or

any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in

Section 275 of the SFA; or

(b) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Rights Entitlement and the Equity Shares are subscribed or purchased under Section 275 of the SFA

by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business

of which is to hold investments and the entire share capital of which is owned by one or more individuals,

each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each

beneficiary of the trust is an individual who is an accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that

corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred

within six months after that corporation or that trust has acquired the Rights Entitlement and the Equity Shares

pursuant to an offer made under Section 275 of the SFA except:

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(i) to an institutional investor or to a relevant person, or to any person arising from an offer referred to in

Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(i) where no consideration is or will be given for the transfer;

(ii) where the transfer is by operation of law;

(iii) as specified in Section 276(7) of the SFA; or

(iv) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and

Securities-based Derivatives Contracts) Regulations 2018.

South Korea

We are not making any representation with respect to the eligibility of any recipients of this Letter of Offer to

acquire the Rights Entitlements and the Equity Shares therein under the laws of Korea, including, but without

limitation, the Foreign Exchange Transaction Law and Regulations thereunder. The Rights Entitlements and the

Equity Shares have not been and will not be registered under the Financial Investment Services and Capital

Markets Act of Korea (the “FSCMA”). Accordingly, the Rights Entitlements and the Equity Shares may not be

offered, sold or delivered, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea

or to, or for the account or benefit of, any resident of Korea (as such term is defined under the Foreign Exchange

Transaction Law of Korea and its Enforcement Decree), for a period of one year from the date of issuance of the

Rights Entitlements and the Equity Shares, except (i) where relevant requirements are satisfied, the Rights

Entitlements and the Equity Shares may be offered, sold or delivered to or for the account or benefit of a Korean

resident which falls within certain categories of qualified professional investors as specified in the FSCMA, its

Enforcement Decree and the Regulation on Securities Issuance and Disclosure promulgated thereunder, or (ii) as

otherwise permitted under applicable Korean laws and regulations.

Furthermore, the Rights Entitlements and the Equity Shares may not be re-sold to Korea residents unless the

purchaser of the Rights Entitlements and the Equity Shares complies with all applicable regulatory requirements

(including, but not limited to, governmental approval requirements under the Foreign Exchange Transaction Law

and its subordinate decrees and regulations) in connection with purchase of the Rights Entitlements and the Equity

Shares.

Sweden

This Letter of Offer has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish

Financial Supervisory Authority). Accordingly, this Letter of Offer may not be made available, nor may the Rights

Entitlements and the Equity Shares be offered for sale in Sweden, other than under circumstances that are deemed

not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980)

om handel med finansiella instrument). Any offering of the Rights Entitlements and the Equity Shares in Sweden

is limited to persons who are qualified investors (as defined in the Financial Instruments Trading Act). Only such

investors may receive this Letter of Offer and they may not distribute it or the information contained in it to any

other person.

Switzerland

This Letter of Offer is not intended to constitute an offer or solicitation to purchase or invest in the Rights

Entitlements and the Equity Shares described herein. The Rights Entitlements and the Equity Shares may not be

publicly offered, directly or indirectly, in Switzerland within the meaning of the Swiss Financial Services Act

("FinSA") and no application has or will be made to admit the Rights Entitlements and the Equity Shares to

trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither this Letter of Offer

nor any other offering or marketing material relating to the Rights Entitlements and the Equity Shares or the Issue

constitutes a prospectus pursuant to the FinSA or pursuant to Articles 652a and 1156 of the Swiss Code of

Obligations (as in effect immediately prior to the entry into force of the FinSA) or pursuant to Articles 27 ff. of

the listing rules of SIX Exchange Regulation or any other trading venue in Switzerland, and neither this Letter of

Offer nor any other offering or marketing material relating to the Rights Entitlements and the Equity Shares or the

Issue may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this Letter of Offer nor any other offering or marketing material relating to the Rights Entitlements and

the Equity Shares or the Issue or our Company have been or will be filed with or approved by any Swiss regulatory

authority. In particular, this Letter of Offer will not be filed with, and the Issue will not be supervised by, the

Swiss Financial Market Supervisory Authority FINMA (“FINMA”), and the Issue has not been and will not be

387

authorised under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection

afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of

the Rights Entitlements and the Equity Shares.

This Letter of Offer, as well as any other offering or marketing material relating to the Rights Entitlements and

the Equity Shares or the Issuer, is confidential and it is exclusively for the use of the individually addressed

investors in connection with the offer of the Rights Entitlements and the Equity Shares in Switzerland and it does

not constitute an offer to any other person. This Letter of Offer may only be used by those investors to whom it

has been handed out in connection with the Issue described herein and may neither directly nor indirectly be

distributed or made available to other persons without our express consent. It may not be used in connection with

any other offer and shall in particular not be copied and/or distributed to the public in or from Switzerland.

Taiwan

The Rights Entitlements and the Equity Shares have not and will not be registered with the Financial Supervisory

Commission of Taiwan or any other governmental authorities of Taiwan, and are not being offered or sold and

may not be offered or sold, directly or indirectly, in Taiwan or otherwise, to, or for the benefit of, any resident or

entity of Taiwan, except (i) pursuant to the requirements of the securities related laws and regulations in Taiwan;

and (ii) in compliance with any other applicable requirements of Taiwan laws.

United Kingdom

In the United Kingdom, this Letter of Offer and any investment or investment activity to which this Letter of Offer

relates is directed only at, being distributed and made available only to, and will be engaged in only with, persons

who are qualified investors within the meaning of Article 2(e) of the Prospectus Regulation and who (i) fall within

the definition of “investment professionals” contained in Article 19(5) of the Financial Services and Markets Act

2000 (Financial Promotion) Order 2005, as amended (the “Order”), (ii) fall within Article 49(2)(a) to (d) (“high

net worth companies, unincorporated associations, etc.”) of the Order or (iii) to whom it can otherwise lawfully

be communicated (all such persons together being referred to as “relevant persons”). Persons who are not relevant

persons should not take any action on the basis of this Letter of Offer and should not act or rely on it or any of its

contents.

Denmark

This Letter of Offer has not been and will not be filed with, registered with or approved by the Danish Financial

Supervisory Authority (Finanstilsynet) or any other Danish regulatory authority.

France

This Letter of Offer has not been and will not be submitted for clearance procedures or otherwise reviewed or

approved by the French Autorité des Marchés Financiers.

The Netherlands

This Letter of Offer has not been and will not be approved by the Authority for the Financial Markets of The

Netherlands (Autoriteit Financiële Markten) pursuant to the Prospectus Regulation.

Germany

None of the Issue, this Letter of Offer or any other prospectus within the meaning of the Prospectus Regulation

has been submitted to, or approved by, the German Federal Financial Supervisory Authority (Bundesanstalt für

Finanzdienstleistungsaufsicht – BaFin).

388

SECTION VIII: OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The copies of the following contracts which have been entered or are to be entered into by our Company (not

being contracts entered into in the ordinary course of business carried on by our Company or contracts entered

into more than two years before the date of this Letter of Offer) which are or may be deemed material have been

entered or are to be entered into by our Company. Copies of the documents for inspection referred to hereunder,

would be available on the website of the Company at www.mahindrafinance.com from the date of this Letter of

Offer until the Issue Closing Date.

A. Material Contracts for the Issue

1. Issue Agreement dated July 21, 2020 between our Company and the Lead Managers.

2. Registrar Agreement dated July 15, 2020 between our Company and the Registrar to the Issue.

3. Banker to the Issue Agreement dated July 21, 2020 between our Company, the Lead Managers, the

Registrar to the Issue and the Banker to the Issue.

4. Monitoring Agency Agreement dated July 17, 2020 among our Company and the Monitoring Agency.

B. Material Documents

1. Certified copies of the Memorandum of Association and Articles of Association of our Company, as

amended.

2. Certificate of commencement of business dated January 19, 1991, issued to our Company by the RoC.

3. Resolution of our Board dated June 1, 2020 approving the Issue.

4. Resolutions of our Board dated July 18, 2020, fixing the terms of the Issue, including (i) Issue Price;

(ii) the Rights Entitlements ratio; and (iii) Record Date;

5. Resolution of our Board dated July 18, 2020 and resolution of our Rights Issue Committee dated July

21, 2020, approving this Letter of Offer.

6. Annual Reports of our Company for Fiscals 2020, 2019, 2018, 2017 and 2016.

7. The Audited Financial Statements and audit report thereon issued by the Statutory Auditors, dated

May 15, 2020, for Fiscal 2020.

8. Consents of our Directors, Company Secretary & Compliance Officer, Lead Managers, Statutory

Auditors, Monitoring Agency, legal counsels, Banker to the Issue, Bankers to our Company and the

Registrar to the Issue for inclusion of their names in this Letter of Offer and to act in their respective

capacities in relation to the Issue.

9. In-principle approvals each dated July 15, 2020, issued by BSE and NSE under Regulation 28(1) of

the SEBI Listing Regulations.

10. Copy of the “Mahindra & Mahindra Financial Services Limited Employees Stock Option Scheme-

2010”.

11. Copy of the Prospectus dated February 28, 2006, filed by our Company in relation to its initial public

offering of equity shares.

12. The statement of special tax benefits for the Company and for Mahindra Rural Housing Finance

Limited (and each of their respective shareholders) from B S R & Co. LLP, Chartered Accountants

dated July 20, 2020.

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13. Due diligence certificate dated July 21, 2020 addressed to SEBI from the Lead Managers.

14. Tripartite agreement dated December 16, 2005 among our Company, the registrar and share transfer

agent, and NSDL.

15. Tripartite agreement dated December 5, 2005 among our Company, the registrar and share transfer

agent and CDSL.

Any of the contracts or documents mentioned in this Letter of Offer may be amended or modified at any time if

so required in the interest of our Company or if required by the other parties, without reference to the Eligible

Equity Shareholders, subject to compliance with applicable law.

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DECLARATION

I hereby certify that no statement made in this Letter of Offer contravenes any of the provisions of the Companies

Act, 2013 and the rules made thereunder. I further certify that all the legal requirements connected with the Issue

as also the guidelines, instructions, etc., issued by SEBI, Government of India and any other competent authority

in this behalf, have been duly complied with. I further certify that all disclosures made in this Letter of Offer are

true and correct.

SIGNED BY THE DIRECTOR OF THE COMPANY

_____________________

Dhananjay Narendra Mungale

Chairman and Independent Director

Date: July 21, 2020

Place: Mumbai

391

DECLARATION





true and correct.


___________________

Ramesh Iyer

Vice-Chairman and Managing Director

Date: July 21, 2020

Place: Mumbai

392

DECLARATION





true and correct.

SIGNED BY THE DIRECTOR AND CHIEF FINANCIAL OFFICER OF THE COMPANY

___________________

V. Ravi

Executive Director and Chief Financial Officer

Date: July 21, 2020

Place: Mumbai

393

DECLARATION





true and correct.


___________________

V.S. Parthasarathy

Non-Executive Non- Independent Director

Date: July 21, 2020

Place: Mumbai

394

DECLARATION





true and correct.


___________________

Anish Shah

Non-Executive Non-Independent Director

Date: July 21, 2020

Place: Mumbai

395

DECLARATION





true and correct.


___________________

Chandrashekhar Bhaskar Bhave


Date: July 21, 2020

Place: Bangalore

396

DECLARATION





true and correct.


___________________

Rama Bijapurkar


Date: July 21, 2020

Place: Mumbai

397

DECLARATION





true and correct.


___________________

Arvind Sonde


Date: July 21, 2020

Place: Mumbai

398

DECLARATION





true and correct.


___________________

Milind Sarwate


Date: July 21, 2020

Place: Mumbai

MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED · 2020-07-23 · Mahindra & Mahindra Financial...

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Transcript of MAHINDRA & MAHINDRA FINANCIAL SERVICES LIMITED · 2020-07-23 · Mahindra & Mahindra Financial...